24 de marzo de 2015 / 14:23 / en 3 años

Brazil's Odebrecht considers bond buyback, JPMorgan says

March 24 (Reuters) - Odebrecht SA, Brazil’s largest engineering firm, is analyzing whether buying back some of its bonds is possible without triggering a credit rating downgrade, according to JPMorgan Chase & Co.

Analysts led by Marcela Nagib wrote in a note that Odebrecht has not repurchased bonds in the market or made a tender offer as rating companies may consider a tender offer below par as selective default. Odebrecht bond prices have slumped in recent months on concerns it may be involved in a scandal at Brazil’s state-controlled Petróleo Brasileiro SA.

According to the JPMorgan note published late Monday, Odebrecht reiterated that neither the company nor its executives acted illegally.

The note quoted Odebrecht executives who participated in an earnings conference call with investors. Efforts to confirm the details were not successful.

In the Petrobras corruption scandal, authorities say the oil producer and the nation’s largest engineering firms negotiated contracts in exchange for bribes.

JPMorgan kept a “neutral” recommendation on Odebrecht and its bonds. The company’s 4.375 percent bond due in April 2025 traded at 74.75 cents on the dollar, down from about 98 cents in September, when the scandal escalated.

“Despite our constructive view on the credit in the medium to long term, we believe that negative headlines and a challenging macro scenario will continue in the coming months, which could prevent outperformance of the bonds in the short term,” the note added.

According to JPMorgan, Odebrecht executives expect its backlog, operational profit margins and revenue to remain stable this year. Contracts in Brazil may account for 25 percent of the company’s backlog by year-end, down from 31 percent last year, a decline that work in Peru and Mexico should help offset.

Odebrecht ended the year with net cash of $1.1 billion, including guarantees. According to the note, Odebrecht had $209 million in debt, and guaranteed $3.1 billion in debt issued to other companies in the group.

Executives said Odebrecht has an additional $1 billion in revolving credit facilities with a five-year maturity. The company has $197 million of debt that will not mature until 2017. (Reporting by Guillermo Parra-Bernal in New York; Editing by Jeffrey Benkoe)

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