Fitch cuts General Shopping e Outlets

Fitch Ratings said it downgraded General Shopping e Outlets do Brasil SA's long-term foreign- and local-currency issuer default ratings to CC from CCC-. The agency also lowered the company's senior secured notes to CC/RR4 from CCC-/RR4, its perpetual notes to C/RR5 from CC/RR5 and affirmed its subordinated perpetual notes at C/RR6.

Fitch downgraded General Shopping's national scale rating to CC(bra) from CCC(bra). The subordinated perpetual notes and the senior secured notes are issued by General Shopping Investment Ltd. and the perpetual notes are issued by General Shopping Finance Ltd.

“The CC rating primarily reflects Fitch's belief that default, including debt restructuring is probable over the outlook period,” Fitch said in a press release.

Fitch noted the company’s high the company’s net leverage ratio, measured as net adjusted debt/EBITDA, was 11.9x in 2019, 35.4x in 2020 and 38.4x in LTM March 2021, respectively, reflecting the 50% credit on the subordinated perpetual notes.

“The company's net leverage ratio will remain above 20x by YE 2022,” the agency said.

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