Fitch cuts, ups Mastellone

Fitch Ratings said it downgraded Mastellone Hermanos SA's long-term local-and foreign-currency issuer default ratings to RD from C following the company's completion of its bond exchange.

The exchange represents a restricted default under Fitch's distressed debt exchange criteria as evidenced by the extension of the debt and the view that the debt exchange was to avoid bankruptcy or insolvency, as Mastellone's cash cushion, free cash flow (FCF) generation and credit lines were insufficient to cover the $200 million maturity this month, the agency said.

Subsequently, Fitch raised Mastellone's foreign-currency IDR to B- and its local-currency IDR to B with a stable rating outlook and assigned a senior secured debt-class rating of B-/RR4 to its notes.

“The upgrade of the long-term local-currency IDR reflects a material improvement in Mastellone's debt maturity profile following the bond exchange, as well decreased interest expenses. The long-term foreign-currency IDR is constrained by Argentina's B- country ceiling,” Fitch said in a press release.

The share pledge on 100% of the capital stock of Leitesol Industria e Comercio SA and a mortgage over the company's plant V, as well as a first-priority interest in a debt service account secured the new notes.

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