Fitch cuts Andrade Gutierrez Engenharia

Fitch Ratings said it downgraded Andrade Gutierrez Engenharia SA's long-term foreign- and local-currency issuer default ratings to CCC- from CCC+. At the same time, Fitch affirmed the company's long-term national scale rating at CCC(bra).

Fitch also downgraded Andrade Gutierrez International SA's senior secured notes due 2021 and 2024, fully and irrevocably guaranteed by Andrade Gutierrez Engenharia, to CCC-/RR4 from CCC+/RR4.

“The downgrade reflects AGE's heightened refinancing risk and strong liquidity pressure amid a scenario of severe economic downturn and restricted access to credit lines. The company's cash position of about R$400 million is weak to support debt amortizations, coupon payments and fines from the lenience agreement of about R$500 million during 2020,” Fitch said in a press release.

“The depreciation of the Brazilian real also adds pressure to the company's annual coupon payments of $43 million. In Fitch's opinion, AGE is highly exposed to the decision between the amortization of debt and coupon payments of about R$400 million during 2020, or to strategically preserve cash to support operations,” the agency said.

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