Arantes Hits CC, Fitch Sees Rollover Trouble

Fitch has cut Brazil’s Arantes to CC from B, including its $150m senior unsecured notes, and put the ratings on watch negative. “The downgrade reflects Arantes’ reduced financial flexibility and potential difficulty to rollover short term lines of credit and meet other near-term debt obligations, including BRL220m of short-term bank debt,” says the agency. It adds that on December 19, Arantes missed an $8m interest payment on its senior unsecured notes due 2013. “At that time in a letter to certain creditors, the company indicated that the interest payment be made by January 10, 2009 and within the cure period,” says Fitch. However, the agency says the combination of a moderate cash position and strong liquidity restriction in the national and international markets has considerably raised Arantes refinancing risks. Arantes is one of the top 10 largest Brazilian beef exporters.