Moody's downgrades JBS ratings over “increased risk”

Moody's ratings agency has downgraded JBS S.A.'s ratings and those of its subsidiary JBS USA and place them under review.

“This action follows confirmation by JBS S.A. that seven executives of the company and its controlling entity, J&F Investimentos, entered into a plea bargain agreement with the Federal Public Prosecutor's Office concerning allegations of corruption,” Moody's said in a statement.

According to the agency, the downgrade has been due to the “increased risks” related to the potential for further charges in the future and government and liquidity issues for the company. Moody's says it has “limited visibility” as to whether these forecasts will be realized.

JBS, a world leader of beef processing, is at the center of the country's latest political storm which broke last week as details surfaced of a plea bargaining agreement signed by the company's founding owners, the brothers Joesley and Wesley Batista.

The statement went on to say that Moody's will focus on obtaining further details of the plea bargaining deal and ongoing investigations. “If liquidity deteriorates as a consequence of these developments, Moody's could take further rating action prior to the final conclusion of its review process,” it concluded.

Translated by Mayra Borges