Fitch cuts Obrascon Huarte Lain

Fitch Ratings said it downgraded Obrascon Huarte Lain SA’s long-term issuer default rating to C from CC.

“The downgrade reflects the announcement from OHL that its largest shareholder and an ad hoc group of bondholders (representing 57.3% of the total outstanding bonds) have entered into a lock-up agreement to restructure the debt. We deem this proposal as a distressed debt exchange (DDE) under our criteria, given the material reduction in terms compared with the original contractual terms, and the intention to avoid a payment default on the €323 million outstanding notes due in March 2022 and around €270 million outstanding notes due in March 2023,” Fitch said in a press release.

If the transaction is completed, Fitch will downgrade the IDR to RD before re-assessing OHL’s restructured profile and assigning a rating consistent with its forward-looking assessment of the company’s credit profile. However, if the transaction is unsuccessful, Fitch would downgrade the IDR to D if a payment default takes places on the next coupon payment date or when the 2022 notes fall due, the agency said.

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