Oi S.A. Issuer Credit Rating Lowered To 'CC' From 'B-' On Potential Debt Haircut, Outlook Negative

Brazil-based telecom operator Oi S.A. announced a proposed amendment to its judicial reorganization plan (JRP) that includes a potential debt haircut for some of its debtholders, which our criteria would assess as equivalent to default. According to the company's proposal, debt owed to banks and export credit agencies (ECAs) could be prepaid with a 60% haircut following asset sales that are expected to be completed in the second half of 2021. On June 18, 2020, S&P Global Ratings lowered its global scale issuer credit ratings to 'CC' from 'B-' and its national scale rating to 'brCC' from 'brBBB-' on Oi. Although the company is not proposing a haircut to the bond at this point, we're lowering our issue-level rating on

...June 18, 2020 - Brazil-based telecom operator Oi S.A. announced a proposed amendment to its judicial reorganization plan (JRP) that includes a potential debt haircut for some of its debtholders, which our criteria would assess as equivalent to default. - According to the company's proposal, debt owed to banks and export credit agencies (ECAs) could be prepaid with a 60% haircut following asset sales that are expected to be completed in the second half of 2021. - On June 18, 2020, S&P Global Ratings lowered its global scale issuer credit ratings to '##' from 'B-' and its national scale rating to 'brCC' from 'brBBB-' on Oi. - Although the company is not proposing a haircut to the bond at this point, we're lowering our issue-level rating on it to '###-' to reflect the heavy capital structure and challenges in completing the reorganization plan. - The amendment also includes the creation of four distinct production units (IPUs) to separate Oi's assets and facilitate asset sales, which credit...

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