S&P rates Globo notes BBB

Standard & Poor's said it assigned a BBB foreign-currency issue rating to the senior exchangeable notes to be issued by Pontis II Ltd., an exempted company incorporated with limited liability in the Cayman Islands.

These senior notes will be mandatorily exchangeable for the amended 2022 notes issued by Globo Comunicacao e Participacoes SA.

The rating on the senior notes reflects the ratings on Globo since, by May 2012, the Pontis II senior notes will have been exchanged for the 2022 notes issued by Globo, S&P said.

Even though Pontis II is not a company related to Globo - and Globo does not guarantee the senior notes - investors in the senior notes will eventually become creditors of Globo given the mandatory exchange clause incorporated in the senior notes' indenture, the agency said.

Until the exchange is concluded, the proceeds of the notes will be invested in assets that carry lower repayment risk than Globo's 2022 notes, namely short-term U.S. Treasury securities, S&P said.

The BBB ratings on Globo and on the amended 2022 notes are supported by the company's satisfactory business risk profile and modest financial risk profile, the agency said.

The company's solid cash flow protection metrics and high cash holdings result from conservative financial policies, mitigating the risks associated with potentially volatile cash flows.

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