S&P rates Rumo notes BB-

S&P said it assigned a BB- rating to Rumo Luxembourg Sarl's proposed senior unsecured notes of $300 million due 2024.

The parent company, Rumo SA and subsidiary North Network will fully and unconditionally guarantee the notes, S&P said.

The proceeds will be partly used to refinance debt and fund North Network's capital expenditure, the agency said.

North Network is the subsidiary responsible for the operations of most portion of Rumo's rail network, S&P said.

The company’s capital expenditure plan will require investments of about R$7 billion until 2020, the agency explained.

S&P also assigned a 4 recovery rating to the notes given an average recovery expectation of 30% to 50%.

The recovery reflects the group's fairly high debt level and its secured debt, the agency said.

While the current amount of secured debt doesn't impact the issue-level rating on the new notes, further issuances of secured debt could prompt a downgrade on the proposed debt’s ratings, S&P said.

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