Fitch lowers Avianca

Fitch Ratings said it downgraded Avianca Holdings SA’s long-term issuer default rating to B from BB-, long-term local-currency issuer default rating to B from BB- and $550 million unsecured notes due in 2020 to B- with recovery rating of RR5 from B+ with recovery rating of RR5.

The agency also downgraded Aerovias del Continente Americano SA’s (Avianca) long-term issuer default rating to B from BB- and long-term local-currency issuer default rating to B from BB-, along with Grupo Taca Holdings Ltd.’s long-term issuer default rating to B from BB-.

The outlook remains negative.

The downgrades reflect Avianca’s ongoing financial profile deterioration amid a difficult operating environment, Fitch said, and a view that any material recovery in its credit profile will remain challenging in the short- to medium-term.

The company’s gross adjusted leverage trend during the last 24 months has been worse than previous expectations with its total adjusted debt-to-EBITDAR reaching 7.4x at year-end 2015, Fitch said.

The negative outlook reflects views that Avianca’s gross adjusted leverage and operating margins will remain weak for the rating category during the next 12- to 18-months due to the current macro and business conditions prevailing in its main markets, the agency said.

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