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Fitch cuts Gol Linhas
Fitch Ratings said it downgraded Gol Linhas Aereas Inteligentes SA's foreign- and local-currency long-term issuer default ratings to B+ from BB-, long-term national rating to BBB(bra) from A-(bra) and $200 million perpetual bonds to B/RR5 from BB-.
The agency lowered VRG Linhas Aereas SA's foreign- and local-currency long-term issuer default ratings to B+ from BB-, long-term national rating to BBB(bra) from A-(bra) and R$500 million of senior notes due 2017 to BBB-(bra) from A-(bra).
Fitch also lowered GOL Finance's foreign- and local-currency long-term issuer default ratings to to B+ from BB-, $200 million of senior notes due 2017 to B/RR5 from BB- and $300 million of senior notes due 2020 to B/RR5 from BB-.
Fitch Ratings also withdrew the expected rating of BB- assigned to a proposed issue of perpetual bonds that did not close, with the deal planned to be issued by wholly owned subsidiary, VRG Linhas Aereas SA.
The outlook is negative.
The downgrades reflect the deterioration in the company's cash flow generation, according to the agency.
Gol's ratings reflect the company's solid business position in the Brazilian domestic market with a significant market share, the agency said.
The ratings also consider the company's business model, which is primarily oriented to the domestic passenger market and has limited product and geographic diversification, the agency said.
The volatility of cash flow generation and high leverage are additional credit considerations, Fitch noted.
The company's total adjusted debt-to-EBITDAR and total adjusted net debt-to-EBITDAR ratios, reached levels of 12.1x and 8.9x, respectively, during 2011. This represents a sharp increase versus 5x and 3.7x during 2010, the agency said.
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