Cost of borrowing Petrobras shares doubles on corruption scandal

martes 16 de diciembre de 2014 17:48 GYT
 

By Paula Arend Laier

SAO PAULO Dec 16 (Reuters) - The cost of borrowing common shares of Petróleo Brasileiro SA in Brazilian equity markets more than doubled over the past month as investors bet that a corruption scandal engulfing the state-run oil producer will further depress its stock.

The short interest rate, or what investors pay for borrowing a security, on the company's common shares hit an average annual 0.5 percent Monday, up from 0.2 percent a month ago, data from clearinghouse Cia Brasileira de Liquidação e Custódia showed. Traders said the rate touched 1 percent early on Tuesday.

According to the clearinghouse, investors boosted borrowings of common shares of Petrobras, as the company is known, to 195 million shares this week from 20 million shares in October. In a short sale, investors borrow a security and sell it, betting the price will fall before they have to buy back shares to restore them to the lender.

Frederico Ferreira Lukaisus, head of equity trading at Banco Fator SA, said short interest rates on Petrobras still look low, and could climb further as pressure from short-sellers mounts. Non-resident investors may be behind the surge in short interest for Petrobras common shares, he added.

The stock rose 2.1 percent to 8.70 reais on Tuesday, the stock's first gain in seven sessions.

Common shares of Petrobras are down 56 percent since October, when a former executive told prosecutors that the company overpaid for assets and work by contractors. Part of the overhead went to fund the ruling Workers' Party, putting the government under attack by opponents and sparking calls for the ouster of Petrobras's top management.

Common and preferred shares of Petrobras have undergone violent price swings, even as the broader trend has seen them decline, over the past three months. The 30-day implied volatility on the shares, a gauge of the risk that big price moves pose in the shares, is at 43.2, well above historical averages. (Writing by Guillermo Parra-Bernal; Editing by Christian Plumb)