July 30, 2016 Comments (0) Blog, Current Investigations

Investor Alert: Petrobras Global Unsecured Floating Rate notes

(Last Updated On: September 21, 2016)

Have you suffered losses investing in Petrobras Global Unsecured Floating Rate notes? If so, The White Law Group may be able to help.

Brazil’s state-led oil company Petrobras contributes about 10 per cent of the nation’s economic output and Brazil’s government, the company’s controlling shareholder, is counting on it to help pull the economy out of its worst recession in decades.

With $124 billion of gross debt at the end of June, Petrobras now ranks as the world’s most heavily-indebted oil company. Moody’s stripped Petrobras of its investment-grade rating in February last year, followed by S&P in September, raising fears that Brazil’s already impoverished government would be forced to offer some form of bailout.

Brazil’s deep recession and slumping oil prices have added to the company’s challenges, reducing import costs but making it even harder to drum up interest for an ambitious asset-sale plan that is central to reducing debt.

Under Brazil’s recently-toppled Workers’ Party, Petrobras was forced to import fuel at a loss to help the government control inflation, costing the company about $20bn between 2011 and 2014.

On July 7th, Petrobras announced reopening of outstanding series of Global Notes and commencement of cash tender offers. For more information on the offer go here.

High-yield bonds—also called non-investment-grade bonds, speculative-grade bonds, or junk bonds—are bonds that are rated below investment grade, typically ‘BB’ or lower by Standard & Poor’s and ‘Ba’ or lower by Moody’s. They pay high yields to bondholders because the borrowers credit ratings are less than pristine, making it difficult for them to acquire capital at an inexpensive cost. Junk bonds carry an above average risk that the issuer will default on the bond. The increased risk makes them arguably unsuitable for many investors.

Brokerage firms that sell such products are required to perform adequate due diligence on the investments to ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of the client’s age, net worth, investment experience, and investment objectives. Firms that fail to perform adequate due diligence, or that make unsuitable recommendations, can be held responsible for losses in a FINRA arbitration claim.

If you suffered losses investing in Petrobras Global Unsecured Floating Rate notes and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.