JBS: Moody's Downgrades Company's Credit Rating To B3

(RTTNews) - Moody's Investors Sevice downgraded the credit rating of Brazilian meatpacker JBS to B3 from B2, and kept the negative outlook for the rating, completing the review launched in May after executives the in charge of the group, Wesley Batista and Joesley Batista, entered into plea-bargain deal with the Brazilian authorities amid a full-scale corruption scandal.

Moody's said that risks related to lawsuits and investigations involving JBS's shareholders and company's executives remain high.

"The uncertainty re-emerged after the new audio recording of a conversation between Mr. Joesley Batista and Mr. Ricardo Saud released on September 4, which led to the review of his benefits under the plea-bargain deal and the increase of controversies between the shareholders," noted Moody's.

The agency also says that a possible revision of the agreement may hinder future asset sales and renegotiation of the company's debts.

Moody's also emphasized that the rating review incorporates, in addition to the risks associated with court proceedings, which may undermine the company's liquidity and market access, strong dependence on banks for short-term debt reduction and inherent volatility of the protein industry.

Corporate governance is another cause for concern, according to the report.

"These elements bring uncertainties about strategic decision-making and drivers for the long term," said Moody's.