Fitch cuts Localiza local currency IDR

Fitch Ratings said it affirmed Localiza Rent a Car SA’s long-term foreign currency issuer default rating at BB+ and national scale rating at AAA(bra).

At the same time, the agency downgraded Localiza's long-term local currency issuer default rating to BBB- from BBB.

The outlook is negative for the foreign currency issuer default rating and stable for the local currency issuer default rating and national scale rating. A full list of ratings follows at the end of this release.

Fitch said the downgrade of the local currency issuer default rating reflects the weakening of Localiza's credit risk profile due to a market-share oriented strategy, which resulted in aggressive growth funded primarily through debt.

“This has resulted in relatively higher than expected leverage levels and recurring negative free cash flow generation. The demand in the car rental industry in Brazil has been growing despite the recession in the country and Localiza has been seeking to further enhance its position in this market,” the agency said in a news release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.