Fitch downgrades Oi, debt to CCC

Fitch Ratings said it downgraded Oi SA's long-term foreign- and local-currency issuer default ratings and its senior unsecured notes to CCC from B.

The agency also downgraded the company's national long-term rating and local debentures rating to CCC(bra) from BBB-(bra).

All ratings have been removed from negative watch.

The downgrades reflect the increased possibility for Oi to undergo debt restructuring in the near-term, following the company's press release on March 9, regarding its engagement with PJT Partners to optimize its liquidity and debt profile. Fitch believes that any meaningful turnaround in the company's credit profile based on its stand-alone operational fundamentals is unlikely in the absence of industry consolidation. As such, Oi will likely face serious liquidity issues from 2017 as its access to capital markets for refinancing would remain constrained given its precarious balance sheet amid continued negative free cash flow (FCF) generation.

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