PT, which is in the process of merging with Brazil-based telecom company Oi, recently announced that it has €897 million (about R$2.7 billion) invested in commercial paper of Rio Forte, a member of Espírito Santo group. In our view, there is a possibility that PT might lose these investments, which will mature on July 15 and July 17, 2014, given the potential financial weaknesses of the Espírito Santo group. We are placing our 'BBB-' global scale and 'brAAA' national scale ratings on Oi S.A. on CreditWatch with negative implications. The CreditWatch placement reflects the possibility of a downgrade depending on our evaluation of the potential loss and its effect on Oi's financial risk profile and liquidity. On July 4, 2014,
