Brazil’s state-owned oil company Petrobras has raised US$6.75bn in bonds and is negotiating a US$1bn loan agreement with the Export-Import Bank of China (China Exim), as the political crisis that started with its own corruption scandal continues to harm economic prospects in the country.

Petrobras sold US$5bn in five-year notes at 8.625% and US$1.75bn in 10-year notes at 9% for its return to the bond market on Tuesday (May 17). The firm offered much higher yields than for its last fundraising in 2014, but received US$20bn-worth of bids from investors – a positive sign for the first state-owned company to tap the bond market since President Dilma Rousseff’s impeachment on May 12.

Petrobras has also signed a term sheet with China Exim, containing the main terms and conditions for the loan, and the final agreement is being negotiated, with the funding planned for 2017.

Rousseff has been removed from office to be investigated following months of protests and impeachment procedures (though not for her alleged involvement in the Petrobras/Car Wash case, but for concealing a public deficit through a fiscal manoeuvre ahead of the 2014 elections), and vice-president Michel Temer has now assumed the presidency, which appears to have helped Petrobras’ fundraising efforts.

But this renewed investor appetite could only be short term, according to Coface. “The economy will not begin its recovery before the political impasse has been totally resolved. The revival of business confidence seems only temporary in the short term as Temer is taking up office with only weak support from the population, as he was not voted by direct elections and as his party is also highly linked to the Car Wash corruption scandals,” the insurer says in a report on Brazil’s economic woes.

The Upper House now has 180 days to convene a trial to discuss the charges against Rousseff, who will be definitively impeached if two-thirds of the Upper House vote in favour, in which case Temer will serve out the remainder of the presidential term, ending in 2018.

The political crisis and, arguably, bad governance that preceded it, have led Brazil into a deep recession: the country’s economy contracted by 3.8% in 2015 – the worst result since 1990 – and Coface expects a further 3% drop in GDP in 2016. Insolvencies reached a record high in 2015, and the insurer downgraded the country’s assessment from A4 to B (significant risk) in September and then again, to C (high risk), in January 2016. The three main credit rating agencies have downgraded Brazil to junk status.

“Although the market has been reacting positively each time there is news favourable to the impeachment we should not expect a strong rebound, as the vice-president’s party is also being investigated for corruption – which makes it difficult for them to present a viable alternative to the current government,” Coface warns.

However, the country’s trade balance (which reached a record surplus in March 2016) is expected to continue to improve, though both imports and exports have been falling in terms of revenues. “Although the sharp depreciation in exchange rates over the last year has finally improved the competitiveness of locally manufactured products, the weaker currency has reduced export prices in US dollar. Thus far, the improved export volumes have not been enough to result in higher revenues,” the report adds.