S&P drops Oi to D

S&P said it downgraded its ratings on Oi SA and its unsecured debt to D from CCC- and its secured debt to D from CCC. The agency also withdrew the 4 recovery rating on the senior unsecured debt and the 2 recovery rating on the secured debt.

The state of Rio de Janeiro’s 7th Corporate Court granted Oi an injunction relief, suspending for 30 days the enforceability of all debt obligations, including payments of interest and principal.

“The D ratings reflect our view that the injunction relief granted to Oi is similar to a standstill since it allows the company not to pay any of its debt obligations in the next 30 days. Oi's interest payment due on Feb. 5, 2023, totals $82 million, coupled with other smaller liabilities.

“Oi can use the 30-day period to prepare for a new judicial reorganization. The alternative would be for Oi to reach an agreement with creditors to restructure its debt, which we would consider as a de facto default given the company's distressed financial position,” S&P said in a press release.

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