S&P lowers Odebrecht

Standard & Poor’s said it lowered the global scale corporate credit rating on Odebrecht Engenharia e Construcao SA to BB from BB+ and national scale long-term rating to brA+ from brAA+.

The agency also said it affirmed the company’s brA-1 short-term corporate credit rating.

The outlook remains negative.

S&P also said it lowered the ratings on Odebrecht Finance Ltd. to BB from BB+ and removed them from CreditWatch developing.

The agency also said it assigned a recovery rating of 4L to this debt, indicating 30% to 50% expected default recovery.

The downgrades reflect a view of the company’s rising financial constraints as the corruption investigations of the company progresses, the agency said.

Although the company is cooperating with authorities to reach a leniency agreement in the short term, the fine amount remains uncertain, S&P said.

Nevertheless, the agency said it believes the litigation related to the corruption probe, along with weaker business conditions for the company, could result weaker credit metrics.

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