Moody’s drops Odebrecht, notes to Caa1

Moody's Investors Service said it downgraded the foreign currency rating assigned to the senior unsecured notes issued by Odebrecht Finance Ltd. (OFL) and guaranteed by Odebrecht Engenharia e Construção SA (OEC) to Caa1 from B3.

At the same time, the agency downgraded OEC’s global scale corporate family rating to Caa1 from B3 and Brazilian national scale rating to Caa1.br from B2.br.

The outlook is negative.

Moody’s said the downgrade reflects its perception of increased credit risk for OEC, due to the company's deteriorated liquidity profile up to June 2016 and business uncertainties amid evolving reputational risks.

The Caa1 rating considers a low likelihood that OEC's internal cash generation and financial profile will significantly recover over the next 12 months as per the challenging environment for infrastructure investments in Latin America and for the company, in particular, along with potential contingent liabilities, the agency added.

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