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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Dominion Energy Inc | NYSE:D | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.28 | 0.52% | 53.78 | 53.915 | 53.24 | 53.60 | 3,654,110 | 23:00:06 |
RIO DE JANEIRO—Moody's Investors Service warned on Saturday of potential ratings downgrades to Brazil's two biggest construction companies, after federal police arrested their top executives.
Moody's placed the debt of Odebrecht Engenharia e Construç ã o SA and Construtora Andrade Gutierrez SA on review for possible downgrade. The companies didn't immediately respond to requests for comment about the Moody's move.
The ratings firm cited the arrests on Friday of the two companies' top executives as part of a widening investigation into alleged price-fixing by contractors at state-run oil company Petró leo Brasileiro SA for billions of dollars in contracts.
Federal Police detained Marcelo Odebrecht and Otá vio Azevedo, chief executives of Odebrecht and Andrade Gutierrez, respectively, along with nine other suspects. Those arrested on Friday haven't yet been charged.
Authorities said the two men had knowledge of their companies' alleged participation in the Petrobras scheme and are investigating them for corruption, money laundering and fraud in public contracts, among other crimes.
Andrade Gutierrez denied wrongdoing on Friday, while Odebrecht Engenharia said the arrests were unnecessary and that it was cooperating with the investigation. Representatives of the two CEOs couldn't be reached on Saturday.
Moody's said the arrests caused a "perception of increased credit risk" for the two companies, whose ratings already had a negative outlook. The firm previously had downgraded Andrade Gutierrez in January amid the burgeoning scandal.
Petrobras has banned more than two-dozen companies named in the investigation from future contracts, including Andrade and Odebracht, sending shock waves through Brazil's oil-and-gas and construction industries while the broader economy is likely in recession. Around five of the companies caught up in prosecutors' dragnet have filed for bankruptcy protection.
In the case of Odebrecht and Andrade Gutierrez, Moody's noted that both companies' operations are diversified among scores of projects, many of them outside Brazil, and that they have enough cash on hand to cover coming debt maturities.
But Moody's also said it is hard to predict the timing and outcome of the investigations. "On top of potential monetary penalties, companies under investigation also risk reputational damage and weakening investor sentiment, reducing their access to funding from public and private capital markets, developing banks and multilateral financing agencies," Moody's said.
Write to Paul Kiernan at paul.kiernan@wsj.com
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