What: Shares of Brazilian oil giant Petrobras (NYSE:PBR) are up 13.5% as of 1:00 p.m. ET today as the company rides the wave of yesterday's announcement that it plans to sell some assets and the Brazilian government continues its efforts to get to the bottom of its kickback and graft scandal back in 2014.
So what: The kickback scandal that has surrounded Petrobras for the past year and a half has weighed heavily on the company's stock as the Brazilian authorities start to unravel the depth of the corruption in this ordeal. Earlier today, the police detained former President Luiz Inacio Lula da Silva and questioned him in a possible role. So far, the scandal has already claimed the job of Petrobras' former CEO and several of its board members, and there is a possibility that it could even include sitting President Dilma Rousseff. While these current investigations may not have a whole lot of impact on the company's current day-to-day operations, the more this ordeal is sorted out, the more investors are going to have some shred of confidence in Petrobras.
Petrobras is also being helped by the announcement that an offer has been made for a stake of its holdings in Argentina for $1.2 billion. It is one of the most highly indebted companies in the world, and with low oil prices, it is struggling to find the funds to pay back some of these financial obligations. If the company can still get some semi-attractive prices on non-core assets, that will help it fill its funding gaps.
Now what: These definitely spell good news for the company, but with $500 billion in debt and a less-than-attractive oil price, Petrobras is going to continue to struggle. Investors should be a little encouraged by today's news, but it certainly isn't anything that should convince someone to dive in and buy shares.