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Published on 9/10/2015 in the Prospect News Emerging Markets Daily.

S&P downgrades Banrisul

Standard & Poor's said it lowered the global scale issuer credit ratings on Banco do Estado do Rio Grande do Sul SA (Banrisul) to BB+ from BBB-, along with its national scale issuer ratings to brAA from brAAA.

The outlook is negative.

The ratings reflect the bank’s adequate business position, moderate risk position, adequate capital and earnings, above average funding and adequate liquidity, S&P said.

The bank’s risk position was revised to moderate from adequate based on deteriorating asset quality, which is in line with that of other Brazilian banks, the agency said.

With non-performing loans rising to 3.9% in fiscal 2014 and 4.7% in the first half of 2015 from 2.9% in fiscal 2013, Banrisul is facing a more difficult scenario for its credit transactions, especially in small- and medium-enterprises, which should lead to further asset quality deterioration, S&P said.

S&P downgrades Brazil companies

Standard & Poor's said it took various rating actions on Brazilian corporations and infrastructure entities following the downgrade of Brazil’s sovereign ratings.

The agency said it lowered the ratings by one notch on the global-scale foreign-currency rating to BB+ and on the national scale to brAA+ on:

Companhia de Gas de Sao Paulo (Comgas)

Companhia Energetica do Ceara (Coelce)

Elektro Eletricidade e Servicos SA (Elektro)

Eletrobras - Centrais Eletricas Brasileiras SA

Transmissora Alianca de Energia Eletrica SA (Taesa)

Neoenergia SA

Companhia de Eletricidade do Estado da Bahia (Coelba)

Companhia Energetica do Rio Grande do Norte (Cosern)

Companhia Energetica de Pernambuco (Celpe)

Itaipu Binacional

Atlantia Bertin Concessoes SA (AB Concessoes)

Rodovia das Colinas SA

Triangulo do Sol Auto - Estradas SA

Arteris SA

Autopista Planalto Sul SA

CCR SA

Autoban – Concessionaria do Sistema Anhanguera Bandeirantes SA

Concessionaria da Rodovia Presidente Dutra SA

Rodonorte Concessionaria de Rodovias Integradas SA

Ecorodovias Concessoes e Servicos SA

Concessionaria Ecovias dos Imigrantes SA

Santos Brasil Participacoes SA

The agency also said it downgraded Eletrobras’s and Itaipus’s global-scale local-currency ratings to BBB-.

S&P also lowered the global-scale ratings on Petroleo Brasileiro SA (Petrobras) to BB from BBB- and national scale ratings to brAA from brAAA.

The agency also said it downgraded Samarco Mineracao SA global-scale rating to BB+ from BBB- on global scale and to 'brAA+' from 'brAAA' on national scale.

S&P also downgraded the global-scale ratings by one notch on:

AmBev – Companhia de Bebidas das Americas (AmBev)

Globo Comunicacao e Participacoes SA

Multiplan Empreendimentos Imobiliarios SA

Ultrapar Participacoes SA

Votorantim Participacoes SA

Votorantim Industrial SA

Votorantim Cimentos SA

Also, the agency said it placed on CreditWatch with negative implications:

Braskem SA

Klabin SA

Odebrecht Engenharia e Construcao SA

Baesa – Energetica Barra Grande SA

Duke Energia International Geracao Paranapanema SA

Tractebel Energia SA

Moody’s rates America Movil exchangeables A2

Moody's Investors Service said it assigned an A2 global scale rating to America Movil, BV's proposed issuance for up to €1 billion in mandatory exchangeable bonds maturing in 2018.

The outlook is stable.

Upon maturity, the unsubordinated bonds will be mandatorily exchanged for ordinary shares of Koninklijke KPN NV, where America Movil has 21.1% equity participation. The bonds are guaranteed by America Movil SAB de CV and will rank equally with all other unsecured and unsubordinated debt obligations of the guarantor.

Proceeds will be used for general corporate purposes, including refinancing.

Moody’s said the ratings are supported by America Movil’s leading position in terms of scale among global telecom operators and its strong presence in Latin America, combined with a majority market share for wireless and fixed-line subscribers in Mexico.

S&P: America Movil bonds A-

Standard & Poor’s said it assigned an A- rating to America Movil BV’s €750 million bonds due 2018, which are mandatory exchangeable into Koninklijke KPN NV’s shares.

America Movil SAB de CV owns 21.1% of Koninklijke KPN’s shares.

The proceeds will be used to refinance debt, S&P said.

America Movil SAB de CV owns America Movil BV. The bonds are senior unsecured obligations and rank pari passu with all of the company’s other present and future unsecured and unsubordinated obligations.

The bonds constitute the company’s direct, unconditional, unsubordinated and unsecured obligations, S&P said.

The ratings reflect the company’s leading market position and strong brand recognition in most markets where it operates, network coverage throughout Latin America, efficient operations based on synergies and scale, the agency said, and product and geographic and diversification.

The ratings also consider the high competitive and regulatory pressures in many of the company’s service areas, S&P said.

Fitch: America Movil notes A

Fitch Ratings said it assigned an expected A rating to America Movil BV’s proposed €750 million mandatory exchangeable notes due 2018.

The issuance amount could increase up to €1 billion.

America Movil is a wholly-owned subsidiary of America Movil SAB de CV.

The proposed notes will be unconditionally and irrevocably guaranteed by America Movil, Fitch said, and will rank pari passu with the company’s existing and future senior unsecured debt obligations.

The notes will be mandatorily exchangeable for common shares of Koninklijke KPN NV in which America Movil holds 21% stakes, the agency said.

The proceeds from the issuance are expected to be used for general corporate uses, including debt repayment, Fitch said.

The ratings reflect the company’s position as the largest wireless service provider in Latin America with well-established multiple-service platforms and solid network competitiveness and a high degree of geographical cash flow diversification, the agency said.

The ratings are tempered by increasing competitive and regulatory pressures in some of America Movil’s key markets, Fitch said.

S&P: Opsimex unchanged after add-on

Standard & Poor’s said its BBB- global scale local-currency and mxAA+ national scale ratings on Operadora de Sites Mexicanos, SA de CV (Opsimex).

The rating on the existing OSM 15 fixed-rate notes is unchanged after a 7 billion in Mexican pesos after the add-on.

Opsimex will use the proceeds for refinancing, asset and capital investments and working capital needs, S&P said.

The ratings reflect the leading position with a 43% share in the Mexican tower market, its strategically located assets across Mexico and high barriers to entry into the market, which it operates, S&P said.

The agency said it reflects an expectation that the company’s debt-to-EBITDA will remain high during the next two years.

But, S&P said it believes this ratio will drop to 5.4x by the end of 2016 and to 4.3x by 2017.

Fitch rates PTT notes AAA(tha)

Fitch Ratings said it assigned a national long-term rating of AAA(tha) to PTT PCL’s upcoming issue of up to 4.2 billion in Thai baht senior unsecured debentures due 2021.

The proceeds will be used to refinance debt, Fitch said.

The notes are rated at the same level PTT’s national long-term rating as they constitute direct, unsecured, unconditional and unsubordinated obligations of the company, the agency said.

PTT will face pressure on its credit metrics in 2015 because of weaker operating cash flows stemming from lower oil prices, Fitch said.

The company’s financial profile benefits from stable cash flows from its gas business, which is underpinned by steady demand and long-term supply and sales agreements with take-or-pay conditions on a cost-plus pricing structure, the agency said.

PTT has reduced its capital expenditure budget for 2015 through 2019 following the decline in oil prices, but subsidiary PTT Exploration and Production Co. Ltd.’s capital expenditures are expected to remain relatively high during the same period, Fitch said.

Fitch: PGE Sweden bonds BBB+

Fitch Ratings said it assigned an expected foreign-currency senior unsecured rating of BBB+ to PGE Sweden AB’s upcoming bonds.

The upcoming notes are rated at the same level as PGE Polska Grupa Energetyczna SA to reflect unconditional and irrevocable guarantee by PGE.

The notes will be issued under PGE Sweden’s €2 billion euro medium-term note program, guaranteed by PGE.

PGE is among the least-indebted large European utilities rated by Fitch with close to zero net leverage, the agency said.

The company also a high exposure to the challenging conventional power generation sector and a low share of more predictable, regulated income from distribution compared with its European peers, Fitch said.

The ratings reflect PGE’s vertically integrated operations in the Polish electricity market, strong position in power generation, lower costs of electricity production than the Polish average and strong position in electricity distribution and supply, the agency said.

PGE’s generation business is under pressure from declining margins, decreasing free carbon dioxide allowances and a rising share of renewables supported by subsidies, Fitch said.

Fitch: Qingdao City notes BBB

Fitch Ratings said it assigned an expected rating of BBB to Qingdao City Construction Investment (Group) Ltd.’s proposed dollar-denominated senior perpetual capital securities.

The securities will be issued by its wholly owned subsidiary Hongkong International (Qingdao) Co. Ltd.

The proceeds will be used for general corporate purposes, Fitch said.

The proposed perpetual securities are rated one notch below the company’s BBB+ issuer default rating to reflect its coupon-deferral feature, the agency said.

Despite the perpetual nature of the securities, Fitch said it considers the effective maturity of the securities as finite value, which is linked to the moment of step-up of the coupon as the company could have a call option in this case – three years after the issuing of the notes.

The ratings are credit-linked, but not equalized with those of Qingdao municipality, the agency added. This is based on the municipality’s 100% ownership of the company and strong oversight on its financial and operational activities, Fitch said.


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