Moody’s downgrades Odebrecht

Moody's Investors Service said it downgraded the foreign-currency rating to B3 from B2 assigned to the senior unsecured notes issued by Odebrecht Finance Ltd. and guaranteed by Odebrecht Engenharia e Construcao SA.

The agency also said it downgraded the global scale corporate family rating to B3 from B2 assigned to Odebrecht Engenharia.

The ratings also were placed on review for further downgrade.

The downgraded ratings include Odebrecht Finance’s R$500 million senior unsecured guaranteed notes due 2018; $500 million senior unsecured guaranteed notes due 2020; $600 million senior unsecured guaranteed notes due 2022; $800 million senior unsecured guaranteed notes due 2023; $550 million senior unsecured guaranteed notes due 2025; $500 million senior unsecured guaranteed notes due 2029; $850 million senior unsecured guaranteed notes due 2042; and $750 million senior unsecured guaranteed perpetual notes.

The outlook is under review.

The downgrades reflect the perception of increased credit risk for the company due to the company's evolving liquidity and reputational risks amid business uncertainties and the unfavorable environment for infrastructure investments in Latin America, Moody’s explained.

Despite Odebrecht’s strong expertise in construction and solid track record of execution in complex engineering projects, its competitive edge has been severely challenged by the ongoing corruption allegations, the agency said.

The prolonged investigation procedures resulted in weaker investor sentiment and limited funding availability to the group's projects, Moody’s added.

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