S&P downgrades Paranapanema

Standard & Poor’s said it lowered the national scale rating on Paranapanema SA to brBBB from brBBB+.

The outlook is stable.

The agency also said it revised the global scale rating outlook to stable from positive and affirmed the rating at B+.

The stable outlook on both ratings reflects the company’s potentially lower cash generation due to the weakening prices for Paranapanema’s products and its operational disruptions, limiting the company’s ability to reduce debt, S&P said.

The agency also said it sees an increasing risk of Paranapanema breaching its financial covenants by the end of 2015 due to impact of hedge accounting.

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