| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers R > Headlines for Rede Energia SA > News item |
Fitch cuts Rede Energia, Cemat's default ratings
Fitch Ratings said it cut Rede Energia SA and its subsidiary, Centrais Eletricas Matogrossenses SA's ratings.
Specifically, it cut Cemat's local and foreign currency issuer default ratings to C from B- and long-term national scale rating to C(bra) from BB+(bra). Fitch also lowered Rede Energia's local and foreign currency IDRs to C from CCC, long-term national scale rating to C(bra) from CCC(bra), $575 million perpetual notes long-term international rating to C/RR4 from CCC/RR4 and R$370 million debenture issuance due in 2015 to C(bra) from CCC(bra).
Both Rede and Cemat were removed from Rating Watch negative.
Fitch said the rating actions are based on the expected effects on Rede Energia and Cemat as a result of a related entity's (Celpa) recent filing for bankruptcy protection, which has been approved in Brazil. Celpa filed for it because of weak liquidity and severe difficulties in rolling over its short-term debt maturities over the last few months.
Rede's and Cemat's already tight liquidity will be further restricted and challenge the ability to service debt for these companies going forward. Moreover, Celpa's bankruptcy protection may trigger cross-default provisions in both companies' outstanding debt, the agency said.
Fitch said it believes that the group's capital structure is not sustainable even with a better debt maturity profile and financial cost reduction at Celpa's level after the debt restructuring. As the group's stated intent is not to force a haircut on Celpa's debt, a sale of relevant assets or capital injection is crucial for the reversal of the current financial situation, the agency said.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.