Petrobras was leading LatAm credit markets higher on Friday following news that the Brazilian government was considering a plan to inject fresh capital into the beleaguered oil company.
The issuer’s 2024s were extending Thursday’s late-day rally to trade at 83.50-84.00 on Friday, marking a five-point leap for the week. The company’s Century bond was up at 72.75, or 5.5 points higher on the week.
Under the plan, the Brazilian Treasury would transfer hybrid securities to Petrobras (Ba2/BB/BBB-), which would count the securities as equity until it sold new stock, according to Reuters citing a local report.
“This is very clear support from the government for Petrobras,” said a trader. “It is very positive for fixed-income investors.”
Fitch, the only rating agency to still have Petrobras in investment-grade territory, has said its BBB- rating reflects strong government backing.
Without that support, it has said, Petrobras’s credit metrics fail to meet investment-grade standards.
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Brazil Energy Insight 
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