S&P gives Oi Movel notes B-

S&P said it assigned B- issue-level and 2 recovery ratings to Oi Movel SA's planned senior secured notes of up to $880 million. The 2 rating indicates an expectation of a substantial recovery (between 70%-90%, rounded: 85%) in default.

The rating incorporates a one-notch uplift from the rating on Oi SA, which will guarantee the notes, S&P said.

Oi will use $700 million of the proceeds to pay Oi Movel's outstanding debenture due in January.

“At the same time, we're affirming the CCC+ issue-level rating on the existing senior unsecured notes due 2025, but revising our recovery expectations to 4 (30%) from 4 (40%), because we expect lower recovery prospects for these notes under a hypothetical default scenario given the significant increase of secured debt in Oi's capital structure in the past three months,” S&P said in a press release.

Oi also sold R$2.5 billion of secured convertible debentures through its subsidiary, Brasil Telecom Comunicacao Multimidia, and is about to issue the R$2 billion secured non-convertible debentures through Oi Movel, the agency said.

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