Fitch slashes Unigel

Fitch Ratings said it downgraded Unigel Participacoes SA's long-term foreign- and local-currency issuer default ratings to CCC from B and the long-term national scale rating to CCC(bra) from BB+(bra). The agency also downgraded the rating on Unigel Luxembourg SA's senior unsecured bond due 2026 to CCC/RR4 from B/RR4. Nd removed the rating watch negative on the ratings.

“The downgrade reflects substantial credit risk for Unigel in making timely payment of principal and interest on its obligations following the announcement that it had hired Moelis with the purpose to improve its capital structure. Fitch believes that is highly unlikely that Unigel will receive support from its shareholder or sell its assets in a time frame that would support its liquidity,” Fitch said in a press release.

“Fitch expects Unigel will violate its maintenance covenant on its debentures of 3.5x net leverage and will need to obtain a waiver if it exceeds this amount, as well as an incurrence covenant of the same amount on its 2026 bond,” the agency added.

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