Odebrecht offshore bonds hammered after Petrobras cancels drillship contract

Odebrecht offshore bonds hammered after Petrobras cancels drillship contract

The ramifications of the Petrobras scandal plus the oil industry price plunge have taken their toll on the oil services arm of Brazil’s construction giant Odebrecht, with bonds hitting record lows, according to Bloomberg.

The latest precipitous dip in the bond value came after Brazil’s state oil firm Petrobras cancelled a contract with Odebrecht Oleo & Gas SA (OOG) for the building of a drillship.

Petrobras, which is tightening expenditure and selling off assets, says the cancellation is within the terms of the contract. The bulk of OOG’s income comes from supplying offshore rigs to Petrobras.

Odebrecht Offshore Drill Finance’s $1.5 billion of bonds (due 2022) fell 12 percent to about 26 cents on the dollar in New York on Thursday after the news.

Odebrecht is a corporation comprising diversified businesses in the fields of engineering, construction, chemicals and petrochemicals and it is accused of being deeply involved in the biggest business corruption case Brazil has ever seen.

Its chief executive, Marcelo Odebrecht, is in jail as part of the giant Operation Car Wash corruption probe that has centred on Petrobras. Odebrecht allegedly helped form a cartel of construction and engineering companies that defrauded Petrobras of billions of dollars through a contract-rigging, bribery and political kickback scheme.

Donal Scully

With 28 years experience writing and editing for newspapers in the UK and Hong Kong, Donal is now based in California from where he covers the Americas for Splash as well as ensuring the site is loaded through the Western Hemisphere timezone.

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