Fitch downgrades Celpa

Fitch Ratings said it has downgraded Centrais Eletricas do Para SA's (Celpa) local- and foreign-currency issuer default ratings to D from B-, long-term national scale rating to D from BB+(bra) and the long-term interntional rating on its $250 million senior unsecured notes due in 2016 to C with a recover rating of RR4 from B- with a recovery rating of RR4.

The agency also said it placed on Rating Watch negative Centrais Eletricas Matogrossenses SA's (Cemat) local- and foreign-currency issuer default ratings of B- and long-term national scale rating of BB+(bra).

Fitch also said it placed on Rating Watch negative parent company Rede Energia SA's local- and foreign-currency issuer default rating of CCC, long-term national scale rating of CCC (bra), the CCC rating with a recovery rating of RR4 on its $575 million perpetual notes long-term international rating and the CCC(bra) rating on its R$370 million debenture issuance due in 2015.

The actions follow news that Celpa has filed for bankruptcy protection in Brazil, Fitch said.

This likely will result in a payment default for some or all of Celpa's debt and result in a protracted debt renegotiation, the agency said.

The Celpa default will negatively affect the payment capacity of Rede as well as trigger cross-default provisions in both Rede's and Cemat's outstanding debt, Fitch said.

Rede's and Cemat's already tight liquidity will be further restricted, the agency said.

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