LONDON, February 25 (Reuters) – The sacking of the head of Brazil’s state-owned energy company Petrobras by the country’s president does not bode well for Latin America’s largest economy, rating agency Fitch said on Thursday, although it would not hurt him immediately. credit score.
“This is not a good sign,” Shelly Shetty, deputy head of Americas Sovereigns Fitch, said in a web broadcast. “It shows Brazil is vulnerable to one step forward and two steps back.”
Brazil’s currency, stocks and bonds fell on Monday after President Jair Bolsonaro moved on Friday evening to topple Petrobras chief Roberto Castello Branco following weeks of clashes over rising fuel prices.
On whether the move could impact BB-Brazil’s credit rating, which is already on a downgrade warning, Shetty said: “We want to get more clarity and are waiting to see how this problem settles.”
“The key to the ranking is the prospect of reform,” he said. (Reporting by Marc Jones Editing by Bill Berkrot)
BRASILIA (Reuters) – Brazilian market regulator CVM said on Tuesday it had opened a second investigation into the announcement of an overhaul in state-controlled oil giant Petrobras, which sparked a two-day stock sell-off that wiped out more than 100 billion reais ($ 18.3 billion) . the value.
CVM on Monday announced the opening of an investigation into the leadership change announced by Brazilian President Jair Bolsonaro on Friday in a social media post. The commission said it was opening a second investigation in response to investors’ complaints.
SAO PAULO (Reuters) – Brazilian securities industry watchdog CVM is expected to launch an investigation on Monday following an announcement by President Jair Bolsonaro of a CEO turnover at state-controlled oil company Petrobras, according to a source with knowledge of the matter.
Bolsonaro first announced the nomination of former General Joaquim Silva e Luna to replace current CEO Roberto Castello Branco to head Petroleo Brasileiro SA, the company’s official title, on social media after markets closed on Friday.
“We expect the enforcement division to initiate an investigation,” said the source, who requested anonymity because the information was confidential.
On Thursday, Bolsonaro had said in a live transmission on his Facebook account that he would make changes to the state-owned company, and complained about rising diesel prices.
Petrobras shares slumped on Friday, with common stock losing nearly 8% and preferred stock slipping 6.6%. The company lost 28 billion real ($ 5.2 billion) in market capitalization.
($ 1 = 5.3823 reais)
Reporting by Aluisio Alves, written by Tatiana Bautzer; edited by Diane Craft
RIO DE JANEIRO (Reuters) – Brazilian President Jair Bolsonaro moves to replace the head of state-owned oil company Petrobras, appointing a retired army general with no oil and gas experience as CEO after weeks of clashing with the current chief executive over rising material prices burn. .
In a statement late Friday from the Ministry of Mines and Energy, which was first shared on Bolsonaro’s Facebook page, the government said it had decided to appoint former Defense Minister Joaquim Silva e Luna to run Petroleo Brasileiro SA, as the company is officially known.
Current CEO Roberto Castello Branco, backed by investors for his efforts to sell underperforming assets and cut debt, will become the second Petrobras leader in three years to fall on the political impact of fuel prices. In 2018, then CEO Pedro Parente resigned when the government forced lower fuel prices in concessions on striking truck drivers.
Parente pledged to keep domestic prices in line with global markets, violating a policy that saw Petrobras sell fuel under international parity, which led to an estimated $ 40 billion in losses from 2011 to 2014.
Likewise, Bolsonaro clashed with Castello Branco over his insistence on raising prices for diesel and other fuels as the Brazilian currency weakened and global crude prices soared. New York-traded ADR Petrobras slumped 8.9% in after-hours trading on Friday, adding to the day’s nearly 7% drop in Brazil-listed preferred stock.
Petrobras has hiked fuel prices since a Reuters’ Feb 5 report disclosed details of the company’s pricing policy, which led analysts to downgrade its stock amid fears of possible political interference.
The overthrow of Castello Branco could force a broader overhaul at Petrobras, which has led to a more market-friendly and less politically driven policy in recent years.
The company’s senior management is considering resigning en masse to protest the CEO’s replacement, three people close to the executive told Reuters late on Friday.
Petrobras said in a statement that it had received notification from the Ministry of Mines and Energy of the proposed CEO change, adding that the ministry had requested an extraordinary shareholder meeting.
The company’s board of directors will meet on Tuesday in regularly scheduled sessions.
Most of the council so far has proven loyal to Castello Branco, although the majority is appointed by the government, which could create a messy transition.
Castello Branco, whose current mandate officially ends on March 20, was appointed to lead Petrobras when Bolsonaro took office in early 2019.
A University of Chicago graduate economist and ally of Economy Minister Paulo Guedes, he is a strong supporter of free market policies and has previously dismissed presidential complaints about prices.
But investors have been nervous about possible political interference since the oil producer confirmed it was selling fuel in Brazil below international prices for a longer period than previously disclosed, confirming a Reuters report.
A possible overhaul of senior management also casts doubt on one of the CEO’s main goals: ending Petrobras’ nearly monopoly at refineries in Brazil, said three sources close to the bidder.
Little is known about investors knowing Silva e Luna, who has often received praise from Bolsonaro for managing Brazil’s large Itaipu hydroelectric dam on the border with Paraguay and Argentina.
He will be the third military figure to occupy a major energy post: president of the Petrobras council and the country’s ministers of Mines and Energy are both admirals.
In April 2019, just months after Bolsonaro took office, the president asked for an explanation for the Petrobras price hike, which quickly reversed. After the company’s shares plunged, Petrobras and the government assured investors that there would be no political interference in fixing fuel prices.
Tensions eased last year as crude oil prices fell, but truck drivers have renewed their grievances in recent months.
During Thursday evening’s announcement of a lower fuel tax, Bolsonaro explained his dissatisfaction with Castello Branco, saying there would be changes at Petrobras “in the coming days.”
Analysts and investors were shaken by the fast-paced series of events on Thursday and Friday.
“This is a difficult situation, and it is happening in an irregular way,” said Edmar de Almeida, a professor specializing in energy at the Federal University of Rio de Janeiro.
Petrobras will complete 67 years by 2021 and will have its 39th CEO – or about one head every 18 months, said UBS analyst Luiz Carvalho.
The company’s problems will remain as long as the controlling shareholder – the government – does not understand that the problem is not with corporate executives, but with a lack of a coherent strategy from above, he said.
“While the world is moving towards an energy transition with a cleaner energy mix, in Brazil we discussed subsidies for diesel consumers,” said Carvalho.
Reporting by Rodrigo Viga Gaier, Gram Slattery and Sabrina Valle; Additional reporting by Marta Nogueira and Gabriel Araujo; Edited by Brad Haynes, Christian Plumb, Daniel Wallis and William Mallard
RIO DE JANEIRO (Reuters) – Management executives of Petroleo Brasileiro SA are considering resigning en masse after the Brazilian government decided to replace Chief Executive Roberto Castello Branco, three people close to management said, asking not to be named because the information is personal.
President Jair Bolsonaro previously said he had decided to appoint former Defense Minister Joaquim Silva e Luna as CEO of a state-controlled oil company.
Reporting by Sabrina Valle; Edited by Christian Plumb