Fitch downgrades Gemsa

Fitch Ratings said it downgraded Generacion Mediterranea SA's (Gemsa) long-term foreign- and local-currency issuer default ratings to C from CCC. Fitch also cut Gemsa's and Central Termica Roca SA's co-issued senior unsecured notes due 2023 to C/RR4 from CCC/RR4.

These downgrades follow Gemsa's announcement it is offering to exchange its co-issued $336 million of 9 5/8% notes due 2023 and Generacion Centro SA's (GECE) $51 million loan due 2023 with amortizing senior unsecured notes due 2027, the agency said.

“Per its criteria, Fitch considers the tender offer a distressed debt exchange (DDE) given that, in Fitch's view, the offer represents a material reduction in terms in the extension of the maturity date and since acceptance of exchange offers requires tendering bondholders to consent to amendments that would impair non-tendering bondholders. Fitch also rates the proposed senior unsecured notes due 2027 of up to $393 million co-issued by Gemsa and CTR CCC(EXP)/RR4,” the agency said in a press release.

If the tender offer is completed, Fitch said it will cut the IDRs to Restricted Default (RD). “Subsequently, Fitch will re-rate Gemsa's IDRs to a level is consistent with its post-exchange risk profile, which is expected to be within the CCC category,” Fitch said.

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