Moody's 'junks' Brazilian firm JBS

  • IANS

    IANS | Brasilia

    June 10, 2017 | 02:55 PM
Money

(PHOTO: Getty Images)

The Moody's agency has lowered the credit rating of the JBS group, keeping it at the "junk" level, further aggravating the situation of the Brazilian meat multinational, involved in several corruption scandals.

The rating agency on Friday lowered the credit rating of JBS by two levels, from "Ba3" to "B2", a level which poses a "high risk" for investors, Efe news reported.

"The downturn reflects the constant risks associated with possible litigation in the future, and the company's governance and reputation risks," Moody's said in a report.

The agency also considered that such risks could "affect the company's operations, market access and liquidity" and does not rule out JBS being "directly or indirectly" subject to further criminal investigations.

The JBS group, one of the world's largest meat exporters, faces a number of scandals, one of which has put Brazilian President Michel Temer on the ropes, who since May has faced an investigation by the Supreme Court for suspected corruption.

The suspicions about Temer are based on the revelations from several executives of JBS that, in addition to accusing Temer of receiving bribes from 2010, he is said to have been heard in an audio recording describing how bribes were paid to 1,829 politicians of 28 parties.

Related to that, the Brazilian Police raided the JBS headquarters on Friday in an operation to search for evidence on the use of inside information in stock exchange operations.

The transaction was carried out in coordination with the Securities and Exchange Commission, a Brazilian stock market regulator that has opened nine investigations against JBS for allegedly buying a large amount of dollars and selling a large number of its shares in the days leading up to the scandal.

The group, needing money to pay off debts and stay in a market that closed access to credit, announced this week the sale of $300 million worth of its beef operations in Argentina, Paraguay and Uruguay to Brazil's Minerva.

Last March, JBS was also the object of the so-called "Weak Meat" operation, which uncovered a mafia of producers who bribed health prosecutors to sell meat in adulterated or poor condition.

Brazilian conglomerate J&F, owner of the multinational JBS, publicly apologised for the illegal acts and agreed to pay a fine of about $3.1 billion.