Petrobras Is No Longer a Buy for Emerging-Markets Investor Mobius
February 05 2016 - 3:40PM
Dow Jones News
By Luciana Magalhaes
São Paulo--Emerging-markets guru Mark Mobius said Friday that he
no longer is investing in Brazil's troubled state-run oil giant
Petróleo Brasileiro SA and that he would buy shares only if oil
prices rise sharply and the state-run firm is successful in cutting
its huge debt.
Meeting with journalists in São Paulo, the executive chairman of
Templeton Emerging Markets Group said current low oil prices have
made it difficult for the company, known as Petrobras, to meet its
debt obligations given the high production costs at its deep-sea
oil fields.
He said Petrobras, the world's most indebted oil company, may
need a government bailout to overcome its financial challenges and
that it also will need to find a way to restructure its debt. "The
government will need to come in and help out," he said.
Officials from Petrobras weren't immediately available for
comment.
Petrobras has been struggling to regain its footing in the wake
of a major corruption scandal that has cost the company billions
and all but paralyzed Brazil's oil and gas sector. And it also is
laboring under a massive debt load taken on during the commodities
boom to develop deep-water petroleum reserves.
The company ended the third quarter of 2015 with total debt of
506.58 billion Brazilian reais ($129.56 billion), up 44% from the
end of 2014 in local-currency terms. It is trying to sell some $15
billion in assets this year to pay down its debt.
Shares of Petrobras have fallen more than 80% since 2010, when
the company raised about $70 billion in a share sale, one of the
largest on record at the time. The company reported a net loss of
3.76 billion reais ($97.3 million) in the third quarter.
Mr. Mobius said Friday that Templeton last year liquidated all
of its holdings in Petrobras in response to the
bid-rigging-and-bribery scandal. In February 2015, Mr. Mobius told
reporters Templeton had about $100 million invested in the oil
firm.
He still oversees about $900 million in assets in Brazil, and
said Templeton is willing to expand investments in some of the
companies already in its portfolio, including banks Itaú Unibanco
SA and Bradesco SA.
Write to Luciana Magalhaes at Luciana.Magalhaes@dowjones.com
(END) Dow Jones Newswires
February 05, 2016 15:25 ET (20:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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