NEW YORK, Sept 6 (IFR) - Bonds linked to Brazilian company
J&F tumbled multiple points on Tuesday following news that a
judge had ordered several top executives to step down as part of
a fraud investigation.
Top managers at companies under the J&F holdings umbrella -
including meatpacker JBS and pulp producer Eldorado - were asked
to suspend their corporate roles and stop all capital markets
activity, Reuters reported on Monday.
The latest probe into fraud at state-owned pension funds has
only added to the lingering uncertainty hanging over a Brazilian
corporate sector still suffering from a long-running corruption
scandal at oil company Petrobras.
"People invested in JBS bonds are waiting to see if more
news emerges, but for now they are not too scared as the
investigation seems to be more concentrated in the holding
company and Eldorado," said a sell side analyst.
JBS USA's 5.875% 2024s were being quoted at 101.25 Tuesday
after being spotted as high as 104.375 late last week, according
Eldorado's 8.65% 2021s, meanwhile, were hit harder, falling
to 81.10 from the 88.00 level seen last Thursday.
In a statement issued on Tuesday, JBS said it didn't have
access to the judge's ruling, but would communicate to the
market once it did.
Press representatives for J&F and Eldorado told Reuters on
Monday that their executives were collaborating with the
J&F Investimentos, the holding vehicle of the Batista
family, has a business portfolio which includes JBS, Banco
Original, hygiene products company Flora and Eldorado.
Eldorado is 80.98% owned by J&F, with Petrobras's and Caixa
Economica Federal's pension funds - Petros and Funcef - each
holding an 8.53% stake.
Petros and Funcef, along with pension funds at Banco do
Brasil and postal service Correios, are part of the
investigation into losses incurred by pensioners as a result of
alleged reckless or fraudulent investments.
The news comes as JBS - now the world's largest beef
exporter - attempts to regroup under a new Ireland-based
company, JBS Foods International.
The plan, which involves listing JBS Foods International in
New York, requires regulatory approvals and could be delayed as
a result of the latest investigation.
"The view is that this will put the restructuring on hold,"
the corporate analyst said.
(Reporting By Paul Kilby; editing by Shankar Ramakrishnan)