Fitch downgrades Odebrecht

Fitch Ratings said it downgraded Odebrecht Engenharia e Construcao SA's long-term foreign- and local-currency issuer default rating to RD (restricted default) from C.

Fitch also said it affirmed Odebrecht Finance Ltd.'s senior unsecured notes at C with recovery rating of RR4.

The downgrades follow news that Odebrecht will not make the $11.5 million coupon payment of its 4 3/8% senior unsecured notes due in 2025, which is fully and irrevocably guaranteed by Odebrecht.

The 30-day grace period exercised Oct. 25 expired Monday (Nov. 26).

The company also announced that it hired financial and legal advisors to engage in discussions with debtholders. This indicates a likely distress-debt exchange process will begin, Fitch said.

The company did not inform about the total amount of debt restructuring, the agency said.

The company's challenge is to conclude a potential debt restructuring within the next two months to prevent bondholders' debt acceleration decision, Fitch said.

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