Fitch downgrades VTR

Fitch Ratings said it downgraded VTR Finance NV’s long-term local-currency and foreign-currency issuer default ratings to B from BB-. The agency also lowered VTR Finance's senior secured $550 million of notes due in 2028 to B-/RR5 from BB/RR3 as well as VTR Comunicaciones SpA revolving credit facilities, senior secured notes of $480 million due 2028 and senior secured notes for $410 million due 2029 to B+/RR3 from BB+/RR2.

Concurrently, Fitch placed all the ratings on rating watch negative (RWN).

“The downgrades reflect the continued deterioration of VTR's fixed business and the weak operating performance of Claro Chile that have resulted in higher forecasted leverage metrics for the combined entities for 2023 than previously projected. They incorporate the limited prospects of deleveraging given intense competition in Chile,” the agency said in a press release.

The RWN reflects the riskiness surrounding the financial strategy of the joint venture and its final organizational structure.

“The RWN and the downgrades reflect our assumption that the servicing of VTR's debt will be primarily, if not exclusively, through cash flow generated by VTR's operations and that the shareholders of VTR and Claro Chile will not inject equity into the JV to strengthen the overall capital structure and liquidity position of the JV,” Fitch said.

The agency said it expects to resolve the RWN once the finance strategy and legal structure are determined; this could take longer than six months.

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