S&P lowers Samarco Mineracao

Standard & Poor’s said it lowered the global scale corporate credit and debt ratings on Samarco Mineracao SA to B from BB-.

The agency also said it lowered the national scale ratings on the company to brBB- from brA-.

The ratings also were removed from CreditWatch negative, where they were placed in November 2015.

The agency also said it revised the company’s stand-alone credit profile to CCC from B-.

The outlook is negative.

S&P also said it revised the recovery ratings on Samarco’s senior unsecured debt to 4L from 4H, reflecting 30% to 50% expected default recovery.

Fines, settlements and potential covenant breaches continue to pressure the company’s liquidity, while uncertainties remain about when it will restart operations since the accident at its Germano site at Minas Germais.

The ratings mainly reflect the uncertainties regarding the timing of operations resumption, increasing liquidity pressure as fines and contingent liabilities pile up and the risk of covenant breaches, S&P said.

The ratings also consider potential financial support from Samarco’s shareholders, the agency said.

Samarco is viewed as a strategically important subsidiary to Vale SA and a valuable asset for shareholders with meaningful potential future cash flow contribution, S&P said.

© 2015 Prospect News.
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