Various Rating Actions On Brazilian Car Rental And Transport Companies On COVID-19 Impact; Off Watch Negative

Considering the initial impact of COVID-19 and related mobility restrictions in Brazil, we currently expect rent-a-car companies' utilization rates to be about 65%-70% on average for 2020 and lower average tariffs due to a different client mix, resulting in weaker operating cash flows this year. Despite some resiliency in the past two months, we also see downside risks for the renewal of corporate leasing contracts, depending on the severity of the economic contraction. On the other hand, we expect car rental and transportation companies to maintain a prudent approach in face of current challenges, with cash inflows from the sale of used cars and announced reductions in investments used to preserve liquidity. As a result, on May 19, 2020, S&P

...May 19, 2020 - Considering the initial impact of COVID-19 and related mobility restrictions in Brazil, we currently expect rent-a-car companies' utilization rates to be about 65%-70% on average for 2020 and lower average tariffs due to a different client mix, resulting in weaker operating cash flows this year. - Despite some resiliency in the past two months, we also see downside risks for the renewal of corporate leasing contracts, depending on the severity of the economic contraction. On the other hand, we expect car rental and transportation companies to maintain a prudent approach in face of current challenges, with cash inflows from the sale of used cars and announced reductions in investments used to preserve liquidity. - As a result, on May 19, 2020, S&P Global Ratings affirmed the ratings on Localiza Rent a Car S.A., JSL S.A., Movida Participat)es S.A., Companhia de Locacao das Americas S.A. (Unidas S.A.), and LM Transportes Interestaduais Servitos e ComTrcio S.A. We also assigned...

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