UPDATE 2-Brazil sees no need to capitalize Petrobras -sources

miércoles 25 de febrero de 2015 17:37 GYT

(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."   Continuación...