As Brazil poll looms, Moody's downgrades Petrobras

Ratings agency Moody's downgraded Brazil's state oil giant Petrobras' debt rating Tuesday, in a new blow for the government's economic reputation five days before presidential election.
The agency cut the highly-leveraged firm's rating one notch from Baa1 to Baa2, and said it expected to keep it on a negative outlook -- a warning of future further downgrades -- until 2016.
The downgrade came as Brazil's leftist incumbent leader, President Dilma Rousseff, prepares to face Social Democrat and business-world favorite Aecio Neves in Sunday's poll run-off.
Petrobras has been widely featured in the campaign following allegations that dozens of politicians -- mainly Rousseff allies, although Neves' party has not entirely escaped the spotlight -- took kickbacks.
Rousseff once chaired the Petrobras board, but insists she was unaware of any corruption.
Petrobras sets great store on deposits beneath layers of salt under the South Atlantic, which could double production to beyond four million barrels per day by 2020, making Brazil a net oil exporter.
Brazil's lawmakers last year voted to earmark all "pre-salt" royalties for boosting spending on public education and healthcare.
Moody's put Petrobras' debt at $170 billion, up 25 billion since last December due largely to currency devaluation, and warned that Brazil has lost revenue by keeping prices low to control rising inflation.
"In this market environment, deleveraging will take longer than anticipated," Moody's said. "We do not see momentum for an upgrade of Petrobras' ratings in the near-to-medium term."