Fitch downgrades Mendes

Fitch Ratings said it downgraded Mendes Junior Trading e Engenharia SA’s foreign- and local-currency issuer default ratings to B from B+ and national scale rating to BBB(bra) from BBB+(bra).

Fitch also said it placed the ratings on negative watch.

The downgrades reflect the weaker than expected performance of the company in the first half of 2014 with no expectation of a recovery this year, the agency said.

The company is facing a deterioration of its business margins and operational cash flow generation due to high volumes of claims that are still under discussion with clients, Fitch added.

The negative watch embraces the challenge that the company has over the next three months in reducing refinancing risks through lengthening of its short-term debt, collecting pending claims and improving its operational performance, the agency said.

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