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S&P lowers Mendes Junior Trading
Standard & Poor’s said it lowered the global scale rating on Mendes Junior Trading e Engenharia SA to CCC+ from B and the national scale rating to brCCC+ from brBB-.
S&P also said it placed the ratings on CreditWatch negative.
The downgrades reflect the company’s lower cash flow generation and weaker liquidity amid the ongoing corruption investigation over potential overpriced contracts from Petroleo Brasileiro SA- Petrobras, the agency said.
S&P said it believes the company’s ability to refund incremental costs from completed works will suffer as clients’ scrutiny over pricing mechanism is rising across the industry, weakening the company’s cash flow-generation ability.
Mendes Junior Trading’s backlog also is expected to shrink given lower replenishing capability amid the investigation and a belief that the company could cancel some contracts to focus on more profitable projects with lower working capital needs.
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