Fitch cuts Brazilian construction companies

Fitch Ratings said it downgraded the ratings of several Brazilian construction companies, including Construtora Queiroz Galvao SA, Galvao Participacoes SA, Galvao Engenharia SA and Mendes Junior Trading e Engenharia SA.

The ratings for these companies remain on rating watch negative, except Mendes Junior Trading, which was removed from watch.

At the same time, Fitch said it is maintaining the negative watch on the following companies: Camargo Correa SA, CCSA Finance Ltd., Construtora Andrade Gutierrez SA, Andrade Gutierrez International SA, Construtora Norberto Odebrecht SA and Odebrecht Finance Ltd.

Key concerns regarding the negative watch include: The ongoing nature of the Lava Jato investigation, which could lead to additional negative findings; decreasing financing options for most companies in the sector; yet-to-be determined punitive measures; challenging conditions for receiving payments for completed projects and recognizing claims related to contract amendments; and the potential restructuring, suspension, or delays under existing contracts with Petrobras, Fitch said.

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