Fitch Maintains Brazilian Construction Companies on Rating Watch Negative

SAO PAULO--()--Fitch Ratings has maintained the ratings for the following issuers on Rating Watch Negative: Camargo Correa S.A. (CCSA), Construtora Andrade Gutierrez S.A. (CAG), Construtora Norberto Odebrecht S.A. (CNO) and Construtora Queiroz Galvao S.A. (CQG). The ratings associated with their financial vehicles' issuances also remain on Rating Watch Negative. A complete list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Key concerns regarding the aforementioned companies have not registered major developments since the last rating action on January 2015. They include: the ongoing nature of the Lava Jato investigation, which could lead to additional negative findings; decreasing and more expensive financing options for most companies in the sector; yet-to-be determined punitive measures; challenging conditions for receiving payments for completed projects and recognizing claims related to contract amendments; and the potential restructuring, suspension, or delays under existing contracts with Petroleo Brasileiro S.A. (Petrobras).

At the same time, there have been no evidences that CNO, CAG, CCSA and CQG's credit metrics have been materially affected by the scandal, although changes on this scenario may occur in the short term. Banks have become more diligent in dealing with Brazilian contractors, cost of capital increased, and the market environment is unfavorable to the government to implement the infrastructure agenda as most of the tier 1 and 2 engineering and construction (E&C) companies in Brazil are under investigation.

CNO, CAG, CCSA and CQG have been implementing a robust cash balance policy, which is positive during the current challenging operating scenario. This should partially cushion a potential negative impact on these companies' financial profile in the next quarters. The operations abroad are also likely to mitigate the expected slowdown within operation in Brazil.

KEY ASSUMPTIONS

--Local scenario for E&C remains challenging;

--Credit will continue scarce, especially for the E&C sector;

--Public infrastructure agenda remains on hold.

RATING SENSITIVITIES

Future developments that may collectively or individually lead to negative rating actions include:

--Application of material fines;

--Expectation of reduction on backlog that could lead to material decrease on cash flow from operations during a considerable period;

--Deterioration of liquidity position to below 1.0x the short-term debt.

Fitch has maintained the following issuers and issuances on Rating Watch Negative:

Camargo Correa S.A.:

--Foreign currency Issuer Default Rating (IDR) 'BB';

--Local currency IDR 'BB';

--National long-term rating 'AA-(bra)';

--National short-term rating 'F1(bra)'.

CCSA Finance Limited:

--Foreign currency IDR withdrawn;

--Local currency IDR withdrawn;

--USD250 million senior unsecured bonds due 2016 'BB'.

Construtora Andrade Gutierrez S.A.

--Foreign currency IDR 'BBB-';

--Local currency IDR 'BBB-';

--National scale rating 'AA(bra)'.

Andrade Gutierrez International S.A.

--USD500 million senior unsecured bonds due 2018 'BBB-'.

Construtora Queiroz Galvao S.A.

--National scale rating 'A(bra)'.

Construtora Norberto Odebrecht S.A.:

--Foreign currency IDR 'BBB';

--Local currency IDR 'BBB';

--National scale rating 'AAA(bra)'.

Odebrecht Finance Ltd.:

--Foreign currency IDR withdrawn;

--BRL500 million senior unsecured notes due 2018 'BBB';

--USD500 million senior unsecured notes due 2020 'BBB';

--USD600 million senior unsecured noted due 2022 'BBB';

--USD800 million senior unsecured notes due 2023 'BBB';

--USD550 million senior unsecured notes due 2025 'BBB';

--USD500 million senior unsecured notes due 2029 'BBB';

--USD850 million senior unsecured notes due 2042 'BBB';

--USD750 million perpetual bonds 'BBB'.

Fitch has withdrawn Odebrecht Finance Ltd.'s foreign currency IDR and CCSA Finance Limited's foreign and local currency IDRs as the agency no longer provides corporate ratings for financial vehicles, only for their respective issuances and guarantors.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 28, 2014);

--'National Scale Ratings Criteria' (Oct. 30, 2013).

Applicable Criteria and Related Research:

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

National Scale Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982536

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Contacts

Fitch Ratings
Primary Analyst:
Alexandre Garcia, +55-11-4504-2616
Associate Director
Fitch Ratings Brasil Ltda
Alameda Santos, 700 - 7 andar - Sao Paulo - SP - CEP: 01418-100
or
Secondary Analyst:
Gustavo Mueller, +55-21-4503-2632
Associate Director
or
Primary Analyst:
(Camargo Correa S.A. and CCSA Finance Limited)
Phillip Wrenn, +1-312-368-2075
Associate Director
or
Secondary Analyst:
Gisele Paolino, +55-21-4503-2627
Senior Director
or
Committee Chairperson:
Ricardo Carvalho, +55-21-4503-2627
Senior Director
or
Elizabeth Fogerty, +1-212-908-0526
Media Relations, New York
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Alexandre Garcia, +55-11-4504-2616
Associate Director
Fitch Ratings Brasil Ltda
Alameda Santos, 700 - 7 andar - Sao Paulo - SP - CEP: 01418-100
or
Secondary Analyst:
Gustavo Mueller, +55-21-4503-2632
Associate Director
or
Primary Analyst:
(Camargo Correa S.A. and CCSA Finance Limited)
Phillip Wrenn, +1-312-368-2075
Associate Director
or
Secondary Analyst:
Gisele Paolino, +55-21-4503-2627
Senior Director
or
Committee Chairperson:
Ricardo Carvalho, +55-21-4503-2627
Senior Director
or
Elizabeth Fogerty, +1-212-908-0526
Media Relations, New York
elizabeth.fogerty@fitchratings.com