Fitch lowers General Shopping

Fitch Ratings said it downgraded General Shopping e Outlets do Brasil SA's long-term foreign- and local-currency issuer default ratings to CCC- from CCC+.

Fitch also said it downgraded the company's senior secured notes to CCC- with recovery rating of RR4 from CCC+ with recovery rating of RR4, perpetual notes to CC with recovery rating of RR5 from CCC+ with recovery rating of RR4 and its subordinated perpetual notes to C with recovery rating of RR6 from CCC- with recovery rating of RR6.

The agency also said it affirmed the company's national scale rating at CCC(bra).

The ratings reflect a view that the recent assets transfer is credit negative, as it has resulted in the deterioration of General Shopping's capital structure due to a reduction in its cash flow generation and asset base, Fitch said.

During the second quarter of 2019, the company executed and completed the process of transferring the equity interests, direct or indirectly held, in 11 of 16 of its shopping centers to a real estate investment fund in addition to the distribution of R$829 million of unrealized profits.

Approximately R$207 million of the dividend was paid in cash and the balance was distributed as shares in the real estate investment fund that received the stakes in the shopping malls, the agency said.

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