Fitch rates Sul America notes AA(bra)

Fitch Ratings said it expects to assign an AA(bra) long-term national rating to Sul America SA's issuance of simple, unsecured and non-convertible debentures.

The expected rating of the second debenture issuance is one notch below the long-term national rating of Sul America and equivalent to the existing rating of the first debenture issuance, the agency said.

The one-notch difference reflects the typical notching in a moderate regulatory environment, where the baseline recovery is below average, Fitch said.

The second debenture issue will be up to R$750 million with a minimum amount of R$500 million and hot issue and green shoe of up to 35% of the total amount of the issuance, the agency said. There will be up to three tranches.

The proceeds will be used for prolonging the maturity profile of debt, finance working capital to support growth, support liquidity levels and allow cushion for potential investments for expansion of operations and consolidation of the company's position, the agency said.

The company has foreign- and local-currency long-term issuer default ratings of BBB-, foreign- and local-currency short-term issuer default ratings of F3, national long-term rating of AA+(bra), national short-term rating of F1+(bra) and a national long-term rating of AA(bra) on its R$500 million debentures due February 2017.

The ratings reflect its strong franchise led by a significant presence in the health and auto segments, consistent and adequate operating performance throughout economic cycles, good liquidity, adequate capitalization and solid and continuously evolving risk management practices, Fitch said.

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