Fitch cuts Light’s ratings

Fitch Ratings said it downgraded the local- and foreign-currency long-term issuer default ratings of Light SA and its wholly owned subsidiaries Light Servicos de Eletricidade SA (Light Sesa) and Light Energia SA's (Light Energia) to CC from CCC+. The agency also lowered the ratings of foreign- and local-currency debt instruments to CC/RR4 from CCC+/RR4 and to CC(bra) from CCC(bra), respectively.

Fitch concurrently dropped the long-term national scale ratings of these entities to CC(bra) from CCC(bra).

“The downgrade reflects Fitch's view that there is a high probability that Light group will enter into a debt restructuring process, following the statements made by management during its 4Q22 earnings call. Light's management publicly stated its intention to start discussions with creditors, in an effort to improve its capital structure and preserve its cash balance while executing its capex program. Fitch expects the restructuring process will fall within its definition of a default-like process, which would result in a downgrade to C,” the agency said in a statement.

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