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NEW YORK (TheStreet) -- Shares of Petrobras (PBR) - Get Petróleo Brasileiro SA Report are lower by 2.57% to $5.88 in morning trading today despite rising oil prices, as Standard & Poor's issued a bearish outlook on the Brazilian state-owned energy company.

S&P reiterated its BBB- rating on Petrobras on Monday but revised its outlook to "negative" from "stable" due to the problems the company will face in funding plans to increase its production.

S&P also said Petrobras would be a junk-rated company, which means it would be below investment grade, without sovereign support. The firm further lowered the so-called "stand-alone credit profile" into junk rating territory to B+ from BB.

Shares are down, despite rising oil prices. Brent crude rose 2.97% to $58.16 at 10:13 a.m. in New York and West Texas Intermediate was up 2.09% to $50.24. Brent moved higher today as Saudi Arabia and its Gulf Arab allies initiated air strikes in Yemen.

Adding pressure to the stock amid the ongoing corruption scandal plaguing the company, Brazilian construction firm Galvao Engenharia filed a request for bankruptcy protection today, the second such filing by a company alleged by authorities to have been involved in corruption with the state-run energy giant, the Wall Street Journal reports.

Separately, investors are buying debt issued by Petrobras, reversing a long decline in the price of its bonds amid expectations that it could soon resolve uncertainty over its financial statements, the Journal also reports.

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Tim Melvin commented on Petrobras in a recent post on Here is what Melvin had to say about the stock:

Before moving away from the Bain & Co. private equity report I want to share a few more investable observations I came away with after reading it this past weekend. Each year I have read the report I find it incredibly useful as a guide to opportunities in certain sectors and regions of the world, and this year is no different.

This year's report highlights Brazil and some of the opportunities that may be available in that troubled nation. I have held some Brazilian stocks for a couple of years now and it has been a bumpy, unpleasant journey so far. Over my holding period, we have gone from "this looks like maximum pessimism" to "maybe they will vote her out and jumpstart things" to "you have got to be kidding me." We have seen widespread corruption involving Petrobras, continued weakness in the economy and, just this weekend, protestors taking to the streets to demand the impeachment of the president the country just reelected. Brazil is a mess and it's not getting better anytime soon.

- Tim Melvin, 'Prospecting in 2 Troubled Economies' originally published 3/18/2015 on

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TheStreet Ratings team rates PETROLEO BRASILEIRO SA- PETR as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PETROLEO BRASILEIRO SA- PETR (PBR) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins." You can view the full analysis from the report here: PBR Ratings Report