Petrobras shares plunge after new Moody's downgrade

Shares in Brazilian oil giant Petrobras fell nearly six percent Wednesday after ratings agency Moody's downgraded the scandal-plagued company for the fourth time in as many months.
The plunge came after Moody's announced Tuesday it had downgraded all ratings for the state-controlled firm, citing concern over a politically charged kickbacks scandal, delays in delivering audited results and a high debt burden exacerbated by sliding oil prices.
Petrobras shares dropped more than eight percent on the Sao Paulo stock exchange before recovering slightly to 5.95 percent in the red in afternoon trade.
President Dilma Rousseff, whose left-wing Workers' Party has been caught up in the corruption scandal, downplayed the ratings cut, saying it showed a "lack of direct knowledge about what is happening at Petrobras."
"I have no doubt Petrobras will be a company with great capacity to recover," she told journalists.
Until recently, Petrobras, the largest company in the world's seventh-largest economy, had been considered one of Brazil's best and most prestigious businesses.
But Moody's dropped its unsecured debt rating from Baa3 to Ba2, two steps into junk territory.
"These rating actions reflect increasing concern about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements, as well as Moody's expectation that the company will be challenged to make meaningful reduction in its very high debt burden over the next several years," it said in a statement.
It is the fourth time Moody's has downgraded Petrobras since October. It warned the oil giant's ratings remain on review for further downgrade.
Some 48 percent of the company is controlled by the Brazilian state.
Petrobras is reeling from allegations that corrupt executives and construction companies inflated contracts to the tune of $4 billion over the course of a decade, funneling some of the cash to politicians including members of Rousseff's ruling coalition.
The allegations have been highly damaging for Rousseff, who chaired the Petrobras board from 2003 to 2010, during much of the period under investigation.
The company's chief executive resigned earlier this month along with the entire board of directors, but new CEO Aldemir Bendine, a former bank executive who is seen as close to the ruling Workers' Party, has so far not soothed market fears.
Investors have grown increasingly wary as the company has repeatedly delayed the release of audited results for the third quarter of 2014.
The company lost nearly $9 billion in stock value after finally releasing an unaudited version of the results that did not account for losses due to corruption.
Petrobras has also been hit hard by tumbling oil prices, a separate controversy over its $792 million loss on the purchase of a refinery in Pasadena, Texas, and legal action over the kickbacks scandal in the United States, where the company is also listed on the New York stock exchange.