MercoPress. South Atlantic News Agency

Moody's downgrades Petrobras credit rating because of corruption scandal

The rating “reflected concerns about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements.”

Moody's Investors Service has downgraded the credit rating of Brazil's state-owned oil company Petrobras because of the widening kickback-corruption scandal affecting the country's largest corporation.The credit rating agency announced its decision late Thursday in a statement posted on its website.

It said the downgrade of Petrobras “reflected concerns about corruption investigations and liquidity pressures that might result from delays in delivering audited financial statements.”

“The ratings remain on review for further downgrade” Moody's said.

Authorities allege that firms bribed former Petrobras executives to win inflated contracts worth as much as 4 billion dollars, and that some of that money was then funneled back to the ruling Workers' Party campaign coffers and those of its allies.

The scheme is among Brazil's biggest corruption scandals ever.

Prosecutors have said that the scheme involved at least 800 million in bribes and other illegal funds. They expect that figure to grow as they keep investigating.

The prosecutors say they've recovered about 170 million, that over 230 businesses of all sizes are being investigated and that 86 people so far are facing charges.

Earlier this week, Petrobras released its third quarter report for 2014, showing that profits dropped 9% compared to the same period in 2013.

Third quarter profits totaled 3.1 billion Reais (1.2 billion), down 38% from those posted in the second quarter of 2014.

The company said Thursday that it will reduce its investments this year because of its current financial situation and losses resulting from the corruption scheme. Petrobras' chief executive, Maria das Gracas Foster said the company will “restrict exploration activities to the necessary minimum.”

In 2015, investments will amount to 42 billion, 25% reduction and by year's end. Petrobras will sell off 3 billion worth of assets, almost equal to its 3.5 billion disinvestment in 2014.