Fitch downgrades Automotores Gildemeister

Fitch Ratings said it downgraded Automotores Gildemeister SA’s foreign-currency issuer default rating to C from CCC, local-currency issuer default rating to C from CCC, $400 million unsecured senior notes due in 2021 to C with recovery rating of RR4 from CCC with recovery rating of RR4 and $300 million unsecured senior notes due in 2023 to C with recovery rating of RR4 from CCC with recovery rating of RR4.

The downgrades follow the company’s proposed exchange offering, Fitch said.

The proposed offering imposes a material reduction in terms of the 2021 and 2023 notes, the agency said.

The successful completion of the exchange would result in further downgrades to restricted default, or RD, Fitch said.

Shortly after the distressed-debt exchange is completed, the ratings would be re-rated and raised to a performing level, which usually is still in the low speculative grade, the agency said.

The C ratings reflect the company’s extreme cash-flow pressure due to weakness in its key markets, Fitch said.

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