S&P lowers USJ Acucar e Alcool

S&P said it lowered the global scale corporate credit rating on USJ Acucar e Alcool SA to SD (selective default) from CC and the Brazil national scale corporate credit rating to SD (selective default) from brCC.

The agency also said it lowered the ratings to D from CC. The recovery rating of 4, indicating 30% to 50% expected default recovery, is unchanged.

The downgrades follow the company's missed interest payment May 9 on its unsecured bond due 2019, which is now under the grace period of 30 days to amend the payments, S&P explained.

The missed interest payment is considered tantamount to a default at the issue level because S&P said it views the payment of interest during the grace period as highly unlikely under the company’s current capital structure.

At the same time, the agency said it considers the recommended exchange offer, if accepted, to be a distressed restructuring, which also is equivalent to a default on its obligations because the amount and conditions of payment differ from its original amount.

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