Brazil’s Petrobras is reportedly teetering close to technical default on $53.6 billion in foreign debt as American bondholders push the company to release its delayed third quarter results and disclose the impact of an alleged corruption scheme.

The state owned company had until Monday to release its third quarter results.

The bondholder charge is being led by New York-based Aurelius Capital Management.

If Aurelius declares a credit event Petrobras would have two months to release the results or face technical default.

Aurelius said an extended delay could signal that “the underlying causes of the delay may be considerably worse than is understood today.”

“Regardless, we would expect Petrobras to be shut out of the international capital markets until its financial reporting is normalized,” Aurelius said in a letter obtained by Bloomberg News.

The results have been pushed back three times since November 3 after PricewaterhouseCooper refused to sign off on accounts tied to transport chief and politician Sergio Macahdo.

Former downstream head Paulo Roberto Costa has alleged that funds from state owned Petrobras were used for illegal political campaign financing, including campaigns run by Machado.

Petrobras has continued to delay the results as it carries out an internal probe into alleged corruption tied to company contracts.

Brazil’s national accounting agency said last month Petrobras may have overpaid by as much as $1.2 billion in transactions being investigated for possible kickbacks.


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