Santander Investment Securities said it has an “overweight” recommendation on the bonds of Brazil’s state-led oil company Petroleo Brasileiro SA on expectation its asset-sale plans and cost cutting efforts will reduce debt.
After meeting company executives, analyst Aaron Holsberg said that executives at Petrobras, as the company is known, have made divestments a high priority and expect to raise $12 billion from asset sales this year and that in a best-case scenario all the proceeds could be used to pay principal on debt.
In the note to clients, Holsberg also praised cost-cutting efforts that cut long term annual spending averages to half what they were in recent years.
“Petrobras’ greatest achievement in 2015, in our view, was the reduction of capex to a $20 billion/year run rate in the third quarter of 2015, the same level Petrobras is guiding to in both its 2016 budget and 2016-2020 plan,” he said.
Brazil Energy Insight 
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