Moody’s lifts Odebrecht view to positive

Moody's Investors Service said it affirmed the Caa1 foreign-currency ratings assigned to the senior unsecured notes issued by Odebrecht Finance Ltd. and guaranteed by Odebrecht Engenharia e Construcao SA.

Moody's also said it affirmed the company’s global scale Caa1 corporate family rating.

The outlook also was revised to positive from negative.

The outlook revision reflects the signing of a lenience agreement by Odebrecht SA with Brazilian federal prosecutors that will result in R$6.8 billion in fines to be disbursed over the next 23 years, Moody’s explained.

It is not clear yet which companies within the group are going to be responsible for the payments, the agency said.

Moody’s also said 77 former executives signed plea bargain deals within the scope of the Lava Jato operation. The company agreed to cooperate with the investigations and remediate any wrongdoing, the agency said.

Despite the large amounts involved, Moody’s said it views the signature of the leniency agreement as credit positive for Odebrecht Engenharia, which is the group's engineering and construction affiliate. This is because it finally removes a long-term uncertainty for its financial and operating performance, the agency said.

The settlement will allow the group to continue to conduct business with Brazil's government and its related entities, Moody’s said, and it should help lifting fund restrictions, especially from the BNDES.

The fact that the agreement, supposedly, binds the U.S. Department of Justice and Swiss authorities also is a positive ratings factor, the agency added.

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