Odebrecht bonds slump as scandal spillover fans investor skepticism

Bonds of Odebrecht SA on Friday hit their lowest level in more than six months as investors feared the spillover of the Brazilian engineering conglomerate’s involvement in a bribery scandal could hamper planned asset sales and the procurement of new contracts across Latin America.

Investors have grown concerned about Odebrecht since Feb. 22, when Reuters reported that the company wants to settle graft-related fines with several Latin American countries before June to prevent a flurry of upcoming elections across the region from putting the brakes on a recovery plan.

The price of Odebrecht Finance Ltd’s 7.5 percent dollar-denominated perpetual bond shed 5 cents on the dollar to 37.5 cents, the biggest intraday decline in 11 months. At that price, yields hit 19 percent, according to prices compiled by Thomson Reuters.

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