S&P cuts Odebrecht Engenharia

S&P said it lowered its global scale issuer credit rating on Odebrecht Engenharia e Construcao SA (OEC) to CC from CCC.

At the same time, S&P lowered the long-term national scale issuer credit rating on the company to brCC from brB. S&P also lowered the short-term national scale rating to brC from brB.

In addition, S&P lowered its issue-level ratings on OEC's sister company, Odebrecht Finance Ltd. (OFL), to CC from CCC. The 4 recovery rating on this debt, indicating an expectation that lenders would receive average (30%) recovery of their principal in the event of a payment default, remains unchanged.

Finally, S&P placed all ratings on CreditWatch negative.

“The downgrade reflects our view of the greater likelihood and incentives for a short-term debt restructuring or de facto default,” S&P said in a news release.

“This stems from OEC's still weak cash flow generation and the Odebrecht group's diminishing financial flexibility.”

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