Moody's downgrades Brazil's Odebrecht construction company
SAO PAULO Aug 22 (Reuters) - Moody's Investors Service downgraded the credit ratings of two units of Odebrecht SA, the engineering and construction company and the financial holding entity, citing liquidity and reputational risks for the Brazilian conglomerate, which is one of the main targets of the country widest-ever corruption probe.
The downgrades affect $3.1 billion in debt issued by Odebrecht Engenharia e Construção SA, the largest engineering and construction company in Latin America, and Odebrecht Finance Ltd. In a statement on Monday, Moody's analyst Cristiane Spercel cited a 17 percent backlog reduction and a cash burn of $660 million in the first quarter of this year as reasons for the downgrade.
Moodys said Odebrecht's collaboration with the so-called 'Operation Car Wash' bribery investigation and a leniency agreement with authorities are "paramount" to removing uncertainties about the engineering company's operating sustainability.
But the terms of any such agreement has not yet been disclosed and sizeable monetary fines could further erode the engineering firm's liquidity, Moody's said. (Reporting by Tatiana Bautzer; Editing by Bill Rigby)
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