Feb 16 Brazilian state-run lenders are considering converting part or all of their outstanding loans to Petróleo Brasileiro SA into equity in a bid to help the embattled oil producer, two sources familiar with the plan told Reuters on Tuesday.
The swap would offer a government lifeline to Petrobras , the world’s most indebted oil company, struggling with a sharp drop in crude prices and a multi-billion dollar corruption scandal.
State development bank BNDES, Banco do Brasil SA and Caixa Econômica Federal are analyzing the option of debt-to-equity conversion, the sources said.
“Ideally, we would like to convert the loans into stocks and have the freedom to sell them later when its value improves,” said a senior BNDES executive, who asked for anonymity because he was not allowed to speak publicly. He said BNDES already holds about 20 billion reais ($4.92 billion) worth of Petrobras stocks and 30 billion reais in loans.
A member of the government’s economic team confirmed that authorities were considering that option among others, but declined to elaborate on the other proposals.
After repeatedly denying the possibility of a bailout, President Dilma Rousseff in January for the first time said her government does not rule out injecting new capital into Petrobras if oil prices continue to drop.
Brazil Energy Insight 
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