Petrobras' domestic debt has reached R$117.9 billion

The domestic debt of Petrobras has reached R$117.9 billion, 40 per cent of it (R$46 billion) owed to official banks: BNDES, Bank of Brazil, and Caixa Econômica Federal, the national sav¬ings bank. In practice, this is as if the Treasury made loans directly to Petrobras. In any event, it shows how dependent the company is on the government's favours.

In addition to these loans, mostly by BNDES (R$36.3 billion), BNDESPar holds R$18.7 billion in Petrobras shares. It also participated in the 2010 capitalisation of Petrobras with R$24.75 billion.

All told, BNDES exposure to the company amounts to about R$80 billion. The finance director of Petrobras, Almir Barbassa, admitted on 29th March that the company will be unable to implement between 10 and 15 per cent of the US$55 billion budgeted for investments this year. Barbassa did note that this is routine.

Petrobras will need more money to finance its new projects, notably in the pre-salt sphere. The company itself mentions US$17 billion by 2014, but market analysts expect plenty more: Crédit Suisse, for instance, projects medium-term requirements of US$25 billion.

While the company's net profit in 2010 was a record US$35 billion, it was disappointing for Crédit Suisse, which expected 11 per cent more. The company's finances bear watching.

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© 2011 Menas Associates