Fitch rates OAS notes B

Fitch Ratings said it assigned a B rating to OAS Investments GmbH's issuer default rating and a B/RR4 rating to its proposed $300 million to $500 million of senior notes due 2019.

The notes are unconditionally guaranteed by OAS SA (B/stable), Construtora OAS Ltda. (B/stable) and OAS Investimentos.

The majority of proceeds will be used to refinance debt.

The ratings reflect the expertise and the position of the OAS group as one of the five largest contractors in the domestic civil construction sector by revenues, and its long track record in engineering and heavy construction in Brazil, the agency said.

The ratings also incorporate increased consolidated leverage, combined with operating margins lower than the industry average, the agency added.

The ratings also factor the backlog concentration in nine large works, business inherent volatility, the challenges of the recent surge of the homebuilding company of the group and the increased financing needs to support the group's business growth strategy, Fitch noted.

OAS net leverage, measured by net debt to EBITDA, was of 13.6x at the end of June 2012, against 6.5x at year-end 2011 and 8.1x at year-end 2010, the agency said.

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