CHICAGO--(BUSINESS WIRE)--Fitch Ratings has downgraded the foreign currency Issuer Default Ratings (IDRs) of several Brazilian corporates following today's sovereign ratings downgrade. Fitch has also affirmed the associated local currency IDRs of several of the affected corporates.
Today, Fitch downgraded the Brazilian sovereign's foreign and local currency IDRs to 'BBB-' from 'BBB' and the country ceiling to 'BBB' from 'BBB+'. The Rating Outlook on the sovereign is Negative.
The rating downgrade reflects Brazil's rising government debt burden, increased challenges to fiscal consolidation and a worsening economic growth backdrop. The difficult political environment is hampering progress on the government's legislative agenda and creating a negative feedback loop for the broader economy. The Negative Outlook reflects Fitch's view that economic and fiscal underperformance is likely to persist while political uncertainty could continue weighing on broader confidence, delay a turnaround in investment and growth, and increase risks for the medium-term fiscal consolidation needed for debt stabilization.
RATING SENSITIVITIES
The foreign currency ratings of the following companies could be negatively impacted by a negative rating action on the sovereign rating of Brazil and/or a downgrade of its country ceiling. The Outlook for Brazil's foreign currency rating is currently Negative.
The Sovereign rating sensitivities include:
--Further growth under-performance or difficulty in consolidating fiscal accounts leading to continued increases in government debt burden. Crystallization of material contingent liabilities would be negative.
--Continued political and governability risks that undermine policy making and dent confidence and growth prospects.
--Erosion of international reserves and deterioration of government debt composition. Since the Outlook is Negative, Fitch's sensitivity analysis does not currently anticipate developments with a high likelihood of leading to a positive rating change. Future developments that could individually, or collectively, result in a stabilization of the Outlook include:
--Fiscal consolidation that leads to greater confidence in the government's capacity to stabilize the debt burden.
--Improved investment and growth environment and a reduction in macroeconomic imbalances.
--A better political environment that is conducive for boosting credibility of policies and reform prospects.
Fitch has taken the following rating actions:
Cielo S.A.
--Foreign currency IDR downgraded to 'BBB' from 'BBB+';
--Local currency IDR downgraded to 'BBB' from 'BBB+';
Outlook revised to Negative from Stable.
Cielo USA Inc.
--Senior unsecured notes due in 2022 downgraded to 'BBB' from 'BBB+'.
Globo Comunicacao e Participacoes S.A.
--Foreign currency IDR downgraded to 'BBB' from 'BBB+'; Outlook revised to Negative from Stable;
--Local currency IDR affirmed at 'BBB+'; Outlook Stable;
--Senior unsecured notes due 2022 and 2025 downgraded to 'BBB' from 'BBB+'.
Itaipu Binacional (Itaipu)
--Foreign currency IDR downgraded to 'BBB-' from 'BBB';
--Local currency IDR downgraded to 'BBB-' from 'BBB';
Outlook Negative.
Ache Laboratorios Farmaceuticos S.A.
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
--Local currency IDR affirmed at 'BBB'; Outlook Stable.
BRF S.A.
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable
--Local currency IDR affirmed at 'BBB'; Outlook Stable;
--Notes due 2018, 2022, 2023, 2024 affirmed at 'BBB'.
Sadia Overseas Ltd.
--Senior unsecured notes due 2017 guaranteed by BRF S.A. affirmed at 'BBB'.
BFF International Ltd.
--Senior unsecured notes due 2020 guaranteed by BRF S.A. affirmed at 'BBB'.
Localiza Rent a Car S.A. (Localiza)
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
--Local currency IDR affirmed at 'BBB'; Outlook Stable.
Raizen Energia S.A.
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
--Local currency IDR affirmed at 'BBB'; Outlook Stable.
Raizen Combustiveis S.A.
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
--Local currency IDR affirmed at 'BBB'; Outlook Stable.
Raizen Energy Finance Limited (Raizen Energy Finance)
--Senior unsecured notes due in 2017 affirmed at 'BBB'.
Samarco Mineracao S.A. (Samarco)
--Foreign currency IDR affirmed at 'BBB';
--Local currency IDR affirmed at 'BBB';
--Senior unsecured debt rating affirmed at 'BBB'; Outlook Stable.
Tractebel Energia S.A. (Tractebel)
-- Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
-- Local currency IDR affirmed at 'BBB'; Outlook Stable.
Transmissora Alianca de Energia Eletrica S.A.
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
--Local currency IDR affirmed at 'BBB'; Outlook Stable.
Vale S.A.
--Foreign currency IDR affirmed at 'BBB+'; Outlook revised to Negative from Stable;
--Local currency IDR affirmed at 'BBB+'; Outlook Stable;
--Senior unsecured debt issuance affirmed at 'BBB+'.
Vale Overseas Limited:
--Senior unsecured debt guaranteed by Vale affirmed at 'BBB+'.
Vale Canada Limited:
--Senior unsecured debt guaranteed by Vale affirmed at 'BBB+'.
Votorantim Cimentos S.A.(VCSA)
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
--senior unsecured notes due 2021, 2022, and 2041 affirmed at 'BBB'.
Votorantim Participacoes S.A. (Votorantim)
--Foreign currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;
--Local currency IDR at 'BBB'; Outlook Stable.
Votorantim Industrial S.A. (VID)
--Foreign currency IDR at 'BBB'; Outlook revised to Negative from Stable.
Companhia Brasileira de Aluminio S.A. (CBA)
--Guaranteed notes due 2019, 2021, and 2024 affirmed at 'BBB'.
Voto-Votorantim Overseas Trading Operations IV Limited
--Senior unsecured notes due 2020 affirmed at 'BBB'.
Date of Relevant Rating Committee: Oct. 15, 2015.
Additional information is available on www.fitchratings.com.
Applicable Criteria
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage (pub. 17 Aug 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869362
Rating Non-Financial Corporates Above the Country Ceiling (pub. 02 Feb 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=859368
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=992367
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=992367
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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