Mensajepor Gaston89 » Lun Nov 10, 2014 2:40 pm
BN) Petrobras Supplier Sinks as Probe Dims Prospects: Brazil Cr edit
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Petrobras Supplier Sinks as Probe Dims Prospects: Brazil Credit
2014-11-10 17:38:01.200 GMT
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By Peter Millard and Anna Edgerton
Nov. 10 (Bloomberg) -- Having Brazil’s state-run oil giant as its main client was a boon for Schahin Petroleo & Gas SA when it sold bonds in 2012. It’s fast becoming a liability.
An expanding bribery investigation surrounding Petroleo Brasileiro SA threatens to delay new offshore orders and put existing contractors under greater scrutiny as government-run Petrobras carries out internal probes and responds to inquiries from Congress and Brazil’s audit court, according to Seaport Group LLC and XP Gestao de Recursos.
Schahin said it has done nothing wrong. Yields on its notes due 2022 had already risen 0.6 percentage point to 6.8 percent since Sept. 8, when testimony from a former Petrobras director now under house arrest was reported in the local media. Its credit rating was lowered three levels to B+ by Standard & Poor’s on Nov. 7, citing weakening liquidity and its continued reliance on Petrobras in a competitive market. S&P made no mention of the investigation. The yield rose to a record 7.4 percent at 12:18 p.m. in New York today.
“It’s likely to slow down, at least contracts with these guys,” Fabiano Santin, a credit analyst at XP, said by telephone from Rio de Janeiro. “That may open the door to companies that have little history supplying Petrobras to win work from the oil producer while the probes are carried out.”
Yield Gap
Schahin, based in Rio, had no involvement in the alleged bribes and money laundering scheme dubbed “Car Wash” by police, the company said in an e-mailed response to questions.
The investigation hasn’t affected the price of its bonds, it said. Petrobras didn’t respond to an e-mail seeking comment on the impact the investigation has had on its suppliers.
The selloff increased the extra yield that investors demand over the average of energy companies to a peak of 3.54 percentage points on Oct. 21 from 2.53 percentage points on Sept. 8.
Construction and engineering companies including OAS SA and Odebrecht SA that supply goods and services to Petrobras projects have also seen their borrowing costs rise since the investigations gathered speed in early September.
Former Petrobras head of refining Paulo Roberto Costa has alleged that builders formed a cartel to overcharge for projects and divert money to politicians. The investigation has put President Dilma Rousseff, who was Petrobras chairwoman from 2003 to 2010, on the defensive.
Tighter Controls
Odebrecht denied Costa’s allegations and said its bonds are moving in line with the market in an e-mailed response. OAS said it performs its activities with integrity, ethics and respect for the law and declined to comment on the performance of its bonds in an e-mailed response.
Petrobras may impose tighter controls on its procurement procedures in response to the investigations, Michael Roche, a strategist at Seaport, said from New York.
“They would stand to either lose market share or be subject to constraint in their growth in business with Petrobras,” Roche said, referring to Schahin. “It’s exhibiting some specific risks to its price action compared to the market as a whole.”
While Roche and Santin said concern stems from the prospect of a slowdown in Petrobras orders, Schahin was cited in court documents in April when federal police released transcriptions of phone conversations between Alberto Youssef, who is awaiting trial for his alleged role in a 10 billion real ($3.9 billion) laundering operation, and one of his associates, who said Schahin was behind on payments.
The conversation was about 450,000 reais in payments for pipes and had nothing to do with bribes, Schahin said in its e- mailed response. The company said it hasn’t had any communication with investigators.
Congressional Commission
In May, lower house member Joao Magalhaes, who is part of a group of lawmakers investigating Petrobras, requested the release of bank records, tax returns and phone conversations at Schahin, according to the congressional website.
The commission members decided not to follow through with requests for information, and its findings should be voted on by Dec. 17, the Senate office handling the investigation said by e- mail. Congress is gathering support to install a new special commission to investigate Petrobras after the current probe expires this year, according to Joao Paulo Peixoto, a political science professor at the University of Brasilia.
Growth Target
“For the first time in 12 years they have a strong opposition, and they will push hard for the continuation of the investigation,” Peixoto said by telephone from Brasilia. “It’s going to be a bother for Dilma’s second term.”
The investigation comes as Petrobras invests about $100 million a day to double crude output by the end of the decade.
It has been relying on Brazilian suppliers including Schahin to meet regulations that require it to hire Brazilian companies.
Schahin has been partnering with Tokyo-based Modec Inc. to supply production vessels to Petrobras. They submitted the most competitive bid to build a unit for the Tartaruga Verde and Mestica fields and the contract is yet to be signed.
The Cidade de Mangaratiba floating, production, storage and offloading vessel, or FPSO, that started operations last month is the most recent unit the partners delivered to Petrobras, according to a statement on Petrobras’ website.
There haven’t been any delays in the tender process for Tartaruga Verde, Schahin said.
The $750 million of notes issued by Schahin II Finance Co.
are backed by revenue from deep-water drill ship Sertao. S&P said revenue from Schahin’s units that are already built is not at risk.
“Capex, big initiatives, I can see how these can get shelved in the backdrop,” Seaport’s Roche said.
