“A Reuters review of a 2009 federal investigation of Petrobras, and interviews with those who conducted it, indicates Rousseff missed opportunities to stop the graft before it erupted into a crisis so big it could push Brazil’s slow-growing economy back into recession next year,” Reuters reported. Rousseff served as Petrobras chairwoman from 2003 to 2011. [Giving up on Brazil ETFs]
“J.P. Morgan notes that about 70% of Petrobras debt is denominated in dollars. As of the third quarter of 2014 the company had $135.4 billion of debt and roughly $11.5 billion was short-term debt,” according to Barron’s.
That is problematic on multiple fronts. First, that short-term debt of $11.5 is more than 25% of Petrobras’ current market value. Second, dollar-denominated is bad news because the WisdomTree Brazilian Real ETF (NYSEArca: BZF) is one of the other Brazil ETFs making new lows today.
The only Brazil ETF that has delivered anything resembling noteworthy performance this year is the ProShares UltraShort MSCI Brazil Capped (NYSEArca: BZQ), which has surged 23%. However, investors have missed the boat, pulling almost $3.2 million from BZQ this year. Nearly $276 million has been pulled from EWZ year-to-date.
iShares MSCI Brazil Capped ETF