Brazil-based telecommunications company Oi recently announced that it has hired PJT Partners as financial advisor to assist the company in evaluating financial and strategic alternatives to optimize its liquidity and debt profile. We believe that Oi's strategy to reduce its debt will probably involve a debt exchange with some level of discount to par value, given its high leverage and the low market prices on its bonds. We would likely assess such a transaction as distressed. We're lowering our global scale corporate credit ratings on Oi to 'CCC' from 'B+' and our national scale ratings to 'brCCC' from 'brBBB-', and removing them from CreditWatch with negative implications. The negative outlook reflects the potential for a distressed debt exchange in the
