S&P lowers Mendes Junior Trading

Standard & Poor’s said it lowered the global scale rating on Mendes Junior Trading e Engenharia SA to B from B+ and the national scale rating to brBB- from brBBB-.

The outlook remains negative.

The downgrades reflect a view of higher refinancing risks due to short-term debt concentration in the near term and the cash flow’s exposure to the backlog concentration, S&P said.

Prior to the downgrade, the negative outlook reflected the company’s pressured liquidity, the agency said.

The ongoing corruption investigations involving Petroleo Brasileiro SA – Petrobras and one of Mendes Junior Trading’s executives could further pressure the company’s refinancing strategy, preventing it from reducing its short-term debt concentration, S&P said.

Although the company’s claim recognition and short-term debt refinancing are in line with expectations, the agency said it believes the current investigations add risks and uncertainties to an already tight liquidity profile, the agency said.

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