S&P downgrades Odebrecht

S&P said it lowered its global scale corporate credit rating on Odebrecht Engenharia e Construcao SA to CCC from CCC+ and lowered the national scale corporate credit rating to brCCC/brC from brB-/brB.

The agency also lowered the issue-level ratings of Odebrecht Finance Ltd. to CCC from CCC+. The 4 recovery rating indicates an expectation of average (30%) recovery in the event of a payment default.

The outlook remains negative.

S&P said the downgrade reflects a view that Odebrecht’s currently weak cash flow generation exposes the company to a potential debt restructuring, given its very high debt and sizable interest burden.

“The fall in cash flows is due to difficulties in replenishing its backlog and in working capital management, and a slow pace of projects' execution,” the agency said in a news release.

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