Mubadala’s Oil Refinery Bonds Get Entangled in Petrobras Drama

The new fuel policy implemented by state-run Petroleo Brasileiro SA is causing trouble for a Mubadala Capital-owned oil refinery, handing bondholders one of the worst returns in Latin America.

Mubadala’s Acelen, which operates the refinery in northeast Brazil, saw its notes fall into distressed territory at around 63 cents on the dollar, down 26 cents since February. The outlook for debt due in 2031 was cut to negative earlier this month by Moody’s Investors Service, which flagged growing risks to the firm’s cash generation.

The market’s increasing unease over the Mataripe refinery’s future says less about the company ...