Research Update: Oi S.A. Issuer Credit Rating Raised To 'CCC' On Debt Exchange, Outlook Negative; New Priority Notes Rated 'CCC+'

On August 8, Brazilian telecom operator Oi S.A. completed the debt exchange approved under its judicial reorganization (JR) plan, resulting in lower gross debt. At the same time, we believe the company still faces operational challenges that will result in negative EBITDA in 2024 and 2025. Consequently, we raised our issuer credit ratings on Oi to 'CCC' from 'CCC-' on the global scale and to 'brB' from 'brCCC+' on the Brazil national scale and removed the ratings from CreditWatch positive. At the same time, we assigned a 'CCC+' issue rating to Oi's US$505 million priority notes due 2027 and raised the issue rating on the US$11 million senior secured notes due 2026 to 'CCC+' from 'D'. The recovery rating on

...- On August 8, Brazilian telecom operator Oi S.A. completed the debt exchange approved under its judicial reorganization (JR) plan, resulting in lower gross debt. At the same time, we believe the company still faces operational challenges that will result in negative EBITDA in 2024 and 2025. - Consequently, we raised our issuer credit ratings on Oi to '###' from '###-' on the global scale and to 'brB' from 'brCCC+' on the Brazil national scale and removed the ratings from CreditWatch positive. - At the same time, we assigned a '###+' issue rating to Oi's US$505 million priority notes due 2027 and raised the issue rating on the US$11 million senior secured notes due 2026 to '###+' from 'D'. The recovery rating on the notes is '2', reflecting our view that debtholders would have substantial recovery (rounded 85%) in a new distress scenario. - The negative outlook reflects our view that the company will generate negative EBITDA during the next two years and is dependent on favorable events,...

Research Update