S&P downgrades Rio de Janeiro

S&P said it lowered the global scale CCC- and national scale brCCC- ratings on the State of Rio de Janeiro to SD (selective default).

The agency also said it removed both ratings from CreditWatch with negative implications, where they were placed in September.

On Sept. 9, the state of Rio de Janeiro missed a $46 million debt-service payment to the Inter-American Development Bank, S&P explained.

The bank loan is guaranteed by the sovereign, the agency said, and the country is expected to fulfill the debt service payment in the following weeks.

However, since the contract of the bank and Rio doesn't incorporate a stated grace period, timely payment means no later than five business days after the due date for payment, S&P said.

As the payment wasn't made within five business days after the due date, this is considered a default, the agency said.

In addition to the bank loan, Rio de Janeiro has payments coming due in September to other multi-lateral lending agencies and to Credit Suisse, S&P added.

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