PETR4 Petroleo Brasileiro S.A. Petrobras

By David Hodari

LONDON--Moody's Investors Service on Thursday said it has placed the credit rating of South America's largest independent investment bank on review for a possible downgrade, following the arrest of the chief executive as part of a wide-ranging corruption probe in Brazil.

Andre Esteves, the head of Banco BTG Pactual S.A. (BBTG11.BR) was arrested Wednesday as part of a corruption investigation into graft at Brazil's state-controlled oil company, Petroleo Brasileiro SA (PBR). Also arrested was a high-ranking senator Delcidio do Amaral, an important member of the Brazil's governing Workers' Party.

Messrs. Esteves and Amaral are accused by prosecutors of conspiring to pay a key witness in the Petrobras investigation millions in bribes to not testify against them, before helping him flee the country in a private plane.

Through his attorney, Mr. Esteves denied wrongdoing. Mr. Amaral's lawyer said his client is fighting the charges against him. Workers' Party President Rui Falcao said in a statement that Mr. Amaral's alleged actions have nothing to with the party.

In a statement, Moody's said it fears the implication of Mr. Esteves in the scandal will dent BTG's relationship with its customers and counterparties. If, after the review, Moody's reaches the conclusion that the downgrade is necessary, it said the rating could be cut "by one or more notches."

"While the situation remains in flux, Moody's believes these events, the outcome and timing of which are highly uncertain, could have negative implications for the firm's franchise, which is dependent on market funding," it said.

The rating firm said BTG has held "a fairly large amount of liquid assets" to balance its dependence on market funding.

Moody's said it will assess actions taken by BTG Pactual to ensure the sustainability of its liquidity and earnings generation, and to mitigate any potential effect that these developments may have on BTG Pactual's customer and counterparty relationships..

BTG's share price plunged 21% on Wednesday to $6.55, as investors were spooked by the arrest of Mr. Esteves.

Write to David Hodari at David.Hodari@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

November 26, 2015 04:53 ET (09:53 GMT)

PETROBRAS PN (BOV:PETR4)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024

PETROBRAS PN (BOV:PETR4)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024