Petroleo Brasileiro (PBR), also known as Petrobras, is weighing granting Braskem (BAK) improved payment terms on some contracts as the petrochemical producer approaches an Aug. 24 deadline to file for bankruptcy protection, Bloomberg reported Monday, citing people familiar with the matter.

Given the involvement of distressed debt investor IG4 Capital in Braskem, Brazil's Petrobras has greater visibility into Braskem and is mulling extending payment timelines, cutting interest rates and boosting the amount of naphtha it offers Braskem, the people told the news agency.

That decision could lower the amount of credit Braskem needs from banks, reducing leverage, Bloomberg reported.

Some creditors, including Elliott Investment Management and Contrarian Capital Management, are seeking a financial commitment from Petrobras, with proposals including an equity contribution, working capital or junior debt, according to the report.

Petrobras has resisted an equity injection because it could increase its ownership of Braskem and potentially require Petrobras to consolidate the company's debt on its balance sheet, Bloomberg reported.

Bloomberg said IG4 declined to comment on the story. Petrobras didn't immediately reply to messages seeking comments.

Petrobras, Braskem and IG4 did not immediately respond to a request for comment from MT Newswires.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)