S&P downgrades USJ

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

The downgrades follow the recent bondholders' acceptance of the company's exchange offer of 69.95% and 98.10% of the original 2019 and 2021 bonds, S&P said.

The agency also said it considers the exchange offer to be distressed, which is tantamount to a default on USJ's obligations because the new terms and conditions of payment differ from the original debt.

S&P said it lowered the issuer credit rating to SD (selective default) because the company is still current on its other obligations.

The agency also said it lowered the rating on USJ's senior unsecured notes to D from C.

S&P also said it withdrew the recovery rating on the notes due 2019 because it does not typically assign or maintain recovery ratings for an entity rated D or SD.

The agency said it will reassess the ratings on USJ as soon as the notes are effectively replaced, given potential improvements in the company's capital structure and cash flow generation amid the new 2023 notes option to accrue interest payments.

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