Moody’s downgrades OAS

Moody’s Investors Service said it downgraded the corporate family rating on OAS SA to C from B2.

Moody’s also said it downgraded the rating on OAS Finance Ltd.’s $500 million perpetual notes to C from B2 and the rating on its $400 million senior unsecured notes due 2021 to C from B2.

The agency also said it downgraded OAS Investments Gmbh’s $875 million senior unsecured notes due 2019 to C from B2.

The outlook is stable.

The downgrades were prompted by OAS’s failure to make a $16 million coupon payment due Jan. 2 on its $400 million senior unsecured notes due 2021.

The ratings reflect an expectation of significant losses for creditors in a potential debt restructuring due to OAS’s heavy debt burden and weaker cash flow generation with further deterioration in its operating environment coming from Brazil’s economic slowdown, increased foreign-currency volatility and by the judicial and administrative proceedings involving corruption allegations against certain executives of the company, Moody’s said.

These recent events impose limitations to the company’s financing alternatives, reflecting in higher debt cost and possible material changes in its debt structure, the agency said.

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