(Adds quote from Brazil president, ratings background, previous capitalization)
By Alonso Soto
BRASILIA, Feb 25 (Reuters) - Brazil has no plans to pump new capital into Petrobras, even after a debt-rating downgrade by Moody's Investors Service threatens to limit the cash-strapped oil company's access to finance and raise its borrowing costs, two government officials told Reuters on Wednesday.
Late on Tuesday, Moody's Investors Service cut the rating on foreign debt of Petroleo Brasileiro SA, as state-run Petrobras is formally known, by two notches to Ba2 from an investment grade Baa3. It kept the company on review for a further downgrade, citing concerns over an corruption scandal and liquidity pressures.
Obligations rated Ba2 are judged by Moody's "to have speculative elements and are subject to substantial credit risk."
"We have no plans to capitalize Petrobras," said one of the officials, who requested anonymity. "The government is not planning to make any cash transfers to Petrobras."
In exchange for capital, the government would get more Petrobras stock, likely diluting minority share holdings. The government has promised not to put new capital into the company since 2010 when Petrobras sold $70 billion of new shares and the government bought the biggest stake.
Brazilian President Dilma Rousseff said Moody's failed to appreciate efforts to avoid the downgrade.
"There was a lack of information about what is happening at Petrobras," she told reporters on Wednesday. "I have no doubt Petrobras will be fully capable of recovering from this without any major consequences."
The government is now concerned the Petrobras' downgrade could raise pressure to cut Brazil's own sovereign debt rating.
To avoid that, the government plans to announce new spending controls.
"The government has not yet shown all the measures that are under discussion. The ratings agencies will probably like some of the measures that we will release soon," said the official, who has been briefed on the plans. "We are working to maintain the country's rating."
The official declined say what the measures were, but said they could be announced in the coming days.
Moody's was the first of the "big-three" ratings agencies to cut Petrobras' credit rating to speculative or "junk" levels. Fitch and Standard & Poor's rate Petrobras BBB-minus, their lowest investment-grade level.
Fitch put that rating on watch negative, meaning a downgrade is possible within months.
A second downgrade to junk could cause Petrobras' bond and stock prices to fall. Many fund managers are only allowed to invest in companies that are rated investment grade by at least two ratings agencies. (Additional reporting by Luciana Otoni; Editing by Chizu Nomiyama, Alan Crosby, Jeb Blount and Andre Grenon)