Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F _______

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes _______ No___X____

Petrobras is rated Investment Grade by S&P

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(Rio de Janeiro, January 18, 2007). – PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, announces that Standard & Poor’s Ratings Services (S&P) assigned today its investment grade ‘BBB-’ local and foreign currency long term corporate credit ratings to Petrobras, with a stable outlook.

According to S&P, the standalone ratings on Petrobras reflects its satisfactory business risk profile, characterized by the quality of its Exploration and Production (E&P) activities (quality, life, and replacement level of reserves), and a dominant market position in all aspects of the Brazilian hydrocarbon industry. In addition, the ratings are underpinned by Petrobras’ improving financial risk profile, which, nevertheless, remains aggressive-to-moderate.

While Petrobras would be significantly affected by Brazil country risk under an economic stress scenario, S&P views the operations and financial profile strong enough to partially mitigate this risk and, despite the controlling position exerted by the Brazilian government, believes Petrobras operates widely as a private company.

These positive factors are balanced by Petrobras’ limited geographic diversification, as the majority of its assets and sales are concentrated in Brazil; the company’s marginal net export revenues (partly resulting from the company's need to import light crude oil to operate its refineries), and the expectation of marginal generation of free operating cash flow (FOCF) over the next several years, as Petrobras is committed to an aggressive capital expenditures budget that should consume a large portion of the company’s projected funds from operations (FFO), according to S&P’s assessment .

http: //www.petrobras.com.br/ri/english

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Contacts:

Petróleo Brasileiro S.A – PETROBRAS Investor Relations Department Raul Adalberto de Campos– Executive Manager E-mail: petroinvest@petrobras.com.br Av. República do Chile, 65 - 22nd floor 20031-912 – Rio de Janeiro, RJ (55-21) 3224-1510 / 9947

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This document may contain forecasts that merely reflect the expectations of the Company’s management. Such terms as “anticipate”, “believe”, “expect”, “forecast”, “intend”, “plan”, “project”, “seek”, “should”, along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Company. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein.

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually oc cur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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