Fitch gives BBB(exp) to Brasil Telecom notes

Fitch Ratings said it assigned a BBB(exp) rating to Brasil Telecom SA's proposed $1 billion senior notes due 2022. The company has BBB local- and foreign-currency issuer default ratings and an AAA(bra) national scale rating. Its R$1.08 billion fifth debenture issue due 2013 is rated AAA(bra), and its R$1.1 billion senior notes due 2016 are rated BBB. The outlook is stable.

Proceeds are expected to be used for refinancing needs and general corporate uses.

Brasil Telecom is a subsidiary of Tele Norte Leste Participacoes SA. Fitch refers to Tele Norte and its subsidiaries collectively as Oi.

The agency said Oi's ratings incorporate its strong market position, business scale, diverse service platforms, moderate regulatory risk, solid cash flow generation and a manageable debt maturity profile.

The ratings also reflect an intense competitive environment that has resulted in modest operating results and a long-term expectation that the ratio of net debt to EBITDA should remain around 1.7 times.

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