Fitch Ratings cut the ratings on Brazilian builders Odebrecht Engenharia e Construcao SA and Construtora Andrade Gutierrez SA as the nation’s largest corruption probe continues to widen.
Odebrecht Engenharia was downgraded to BBB-, the lowest level of investment grade, while Andrade Gutierrez was cut to junk at BB+. Both ratings have a negative outlook, Fitch said in a statement Tuesday.
The move was prompted by the detention of Marcelo Odebrecht, the chief executive officer of Odebrecht SA, and Andrade Gutierrez’s chief Otavio Azevedo, as the police investigate allegations that builders paid bribes to the state-run oil producer in return for contracts. The incarcerations are fueling concern about possible “reputational damage” that could make it tougher to obtain new contracts and financing, Fitch analysts including Alexandre Garcia wrote.
Fitch also lowered bonds issued by subsidiaries Odebrecht Finance Limited and Andrade Gutierrez International SA.