Fitch downgrades Oi

Fitch Ratings said it downgraded Oi SA's long-term foreign- and local-currency issuer default ratings and senior unsecured notes to C from CCC.

The agency also said it downgraded the company's national long-term rating and local debentures rating to C(bra) from CCC(bra).

The agency also downgraded Telemar Norte Leste, SA’s senior notes, originally due 2017, 2019 and 2020 to C with recovery rating of RR4 from CCC+ with recovery rating of RR3, along with its outstanding foreign-currency senior unsecured notes to C with recovery rating of RR5 from CCC with recovery rating of RR4 and local debentures to C(bra) from CCC(bra).

Oi Brasil Holdings Cooperatief UA’s €600 million senior notes due 2021 also was downgraded to C with recovery rating of RR5 from CCC with recovery rating of RR4.

The downgrade reflects Oi’s ongoing negotiation with its bondholders with regards to a potential restructuring of the company’s capital structure, Fitch said.

While the negotiation continues, Oi has yet to respond or make a counterproposal to the noteholders’ terms, the agency said.

Fitch said Oi’s current capital structure is unsustainable and the company faces an imminent default risk given sizable short-term debt maturities.

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