Telemar, Brasil Telecom on Negative Watch: Fitch

Fitch has placed on negative watch the BBB minus rating of Brazil’s Tele Norte Leste Participacoes (TNE) and Telemar Norte Leste (TMAR), following the announcement made by Telemar to acquire a controlling stake in Brasil Telecom Participacoes (BRP). The local currency rating IDR of BBB ratings on BRP and its subsidiary Brasil Telecom SA (BTM) were placed on negative watch, as well as the local scale rating of AA+(bra). Also on negative watch are a BRL1.08bn debenture and BTM $200m million PRI notes due 2014, rated BBB. The rating watch reflects a potential increase in leverage if the acquisition of BRP is successful, the agency says. It will be resolved once the final details of the transaction are known and the ultimate long term capital structure is determined.