Fitch lowers Latam Airlines

Fitch Ratings said it downgraded Latam Airlines Group SA’s long-term foreign-currency issuer default rating to B+ from BB-.

Fitch also said it downgraded TAM SA’s foreign- and local-currency issuer default ratings to B+ from BB- and national long-term rating to A-(bra) from A (bra).

The agency also said it downgraded Latam’s and TAM’s unsecured notes to B+ with recovery rating of RR4 from BB-.

The outlook also was revised to negative from stable.

The downgrades reflect Latam’s weaker-than-expected consolidated operational performance during 2015, Fitch said, and a view that the company’s key credit metrics will remain pressured over the next 12- to 18-months, Fitch said.

The agency said it believes that prevailing unfavorable economic conditions in Latin America will make it more difficult for the company to execute de-leveraging during 2016 through 2017.

The negative outlook also considers Latam’s higher leverage and weaker operational performance versus its global peers within the rating category, Fitch said.

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