$128 Billion In Debt -- Petrobras -- November 20, 2015

Updates

November 21, 2015: the reader who posted the first comment about Petrobras (see below) may have been right on target. Reuters/Rigzone is reporting that shares of Petrobras steadied, reversed, and rose yesterday on news that the Brazilian government is ready to "bail them out."

Petrobras was leading LatAm credit markets higher on Friday following news that the Brazilian government was considering a plan to inject fresh capital into the beleaguered oil company. 

The issuer's 2024s were extending Thursday's late-day rally to trade at 83.50-84.00 on Friday, marking a five-point leap for the week. 

The company's Century bond was up at 72.75, or 5.5 points higher on the week. 

Under the plan, the Brazilian Treasury would transfer hybrid securities to Petrobras (Ba2/BB/BBB-), which would count the securities as equity until it sold new stock, according to Reuters citing a local report. 

November 20, 2015:  Sometimes I post something, not always asking the next obvious question. I bring that up because shortly after posting the note below about Petrobras' massive debt, there is now talk that Petrobras might be forced to declare bankruptcy. The question is: who would benefit? On business talk radio in the local area -- just north of where ExxonMobil is headquartered, Irving, TX -- the talk is that ExxonMobil would likely benefit. ExxonMobil has lots of "dry powder." According to Yahoo!Finance, ExxonMobil has about $4 billion in cash, and about $33 billion in annual operating cash flow.
 

Original Post

 

This story is being reported "everywhere." This link takes you to Bloomberg/Rigzone:

The debt clock is ticking down at Brazil’s troubled oil giant, Petrobras.

Next up: $24 billion of repayments over 24 months.

That’s a towering hurdle for a company that hasn’t generated free cash flow for eight years and whose borrowing rates are soaring. Annual debt servicing costs have doubled to 20.3 billion reais ($5.4 billion) in the past three years. 

Petrobras has a massive $128 billion in debt.

*********************************

The Gift That Keeps On Giving

November 20, 2015: HHS says "government is obligated to bailout insurance companies" who take losses under ObamaCare. This story is starting to snowball. I can't wait to see the ObamaCare supporters lobbying to bailout the insurance companies. But this was certainly crazy: between 2014 and 2016, insurance companies losing money on ObamaCare will be "reimbursed" for those losses -- the money coming from the insurance companies that did "well."

November 20, 2015: wow, this is really getting bad. Over at Bloomberg:

This was part of a terrible, horrible, no good, very bad news cycle for Obamacare; as ProPublica journalist Charles Ornstein said on Twitter, “Not since 2013 have I seen such a disastrous stream of bad news headlines for Obamacare in one 24-hour stretch.” 

Thank goodness the GOP did not defund ObamaCare; all of this would have been blamed on the GOP.

November 20, 2015: CNBC --

For anyone involved with the Affordable Care Act, yesterday was a big day.

It's the day any vestige of the notion that the Obamacare insurance exchanges have a chance of being successful in their current form lost whatever credibility was remaining.
The nation's biggest insurance company, with more than half of its earnings tied to its relationship to the federal government, just announced that it has had enough of Obamacare and if it isn't fixed in the next few months it is going to bail.

It's not just UnitedHealth Group that is having very serious red ink problems over Obamacare.

Goldman Sachs just reported that the thirty not-for-profit Blue Cross plans are expected to lose money as a group for the first time since the 1980s—with the Obamacare exchanges being the key driver.

Already, 12 of the 23 Obamacare created health insurance co-ops have become insolvent with almost all of the rest losing money—100 percent of their business is Obamacare business.

The Obama administration itself has reported that in its risk corridor reinsurance program, the carriers losing money are doing so at a rate eight times larger than the few carriers that are making money.

*************************

"S"

I doubt anyone will want it, but "S" might soon be available as a NYSE ticker symbol.  Reuters is reporting that Sprint is borrowing more money, has lowered its guidance, and its share price dropped another 4% on a day that the market went up about a 100 points.

Disclaimer: this is not an investment site. Do not make any investment or financial decisions based on what you read here or think you may have read here. I have never invested in Sprint -- well, maybe 20 or 30 years ago, I forget -- and have no plans to do so now. I follow Sprint because I have a Sprint phone account (Samsung flip phone). See Huffington Post on the flip phone.

*******************************

Sing it, George!