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Fitch Downgrades Various Brazilian Corporates; Affirms Others

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has downgraded the Long-Term Foreign-Currency Issuer Default Ratings (IDRs) of several Brazilian corporates following the May 5th downgrade of the Sovereign foreign currency rating to 'BB' from 'BB+' and the Country Ceiling to 'BB+' from 'BBB-'. The Rating Outlook on the sovereign is Negative as it is on the corporates that have been downgraded.

At the same time, Fitch has affirmed the ratings of several issuers at 'BB+' and higher based on factors that mitigate sovereign transfer and convertibility risk. These factors include hard-currency export revenues, overseas production facilities, foreign parent or strategic partner, unrestricted cash held abroad, or committed credit facilities.

Brazil's downgrade reflects the deeper-than-anticipated economic contraction, failure of the government to stabilize the outlook for public finances, and the sustained legislative gridlock and elevated political uncertainty that are sapping domestic confidence and undermining governability as well as policy effectiveness. Maintenance of the Negative Outlook reflects continued uncertainty as to the progress that can be made to improve the outlook for growth, public finances and the government debt trajectory.


The foreign currency ratings of the following companies could be negatively impacted by a negative rating action on the sovereign rating of Brazil and/or a downgrade of its country ceiling. The Outlook for Brazil's foreign currency rating is currently Negative.

Sovereign rating sensitivities include:

--Failure to take policy action to arrest the pace of increase in the government debt burden. Crystallization of contingent liabilities would be negative.

--Policy drift and an inability to implement measures that improve the outlook for growth and public finances.

--Erosion of international reserves and deterioration in government debt composition.

The Rating Outlook is Negative. Consequently, Fitch's sensitivity analysis does not currently anticipate developments with a high likelihood of leading to a positive rating change. Future developments that could individually, or collectively, result in stabilization of the Outlook include:

--An improvement in the political environment that improves policy implementation and supports confidence, growth and reform prospects.

--Fiscal consolidation that leads to greater confidence in the capacity of the government to achieve debt stabilization.

--Improved investment and growth environment and a reduction in macroeconomic imbalances.

Fitch has taken the following rating actions:

Ache Laboratorios Farmaceuticos S.A.

--Long-Term Foreign-Currency IDR downgraded to 'BB+' from 'BBB-'; Outlook Negative;

--Long-Term Local-Currency IDR affirmed at 'BBB'; Outlook Stable.

BR Malls Participacoes S.A.

--Long-Term Foreign-Currency IDR affirmed at 'BB+'; Outlook revised to Negative from Positive;

--Long-Term Local-Currency IDR affirmed at 'BB+'; Outlook Positive.

Braskem S.A.

--Long-Term Foreign-Currency IDR affirmed at 'BBB-'; Outlook Negative;

--Long-Term Local-Currency IDR affirmed at 'BBB-'; Outlook Stable;

--Notes due 2017 affirmed at 'BBB-'.

Braskem Finance Limited

--Unsecured senior notes due 2018, 2020, 2021, 2022 & 2024 affirmed at 'BBB-';

--Perpetual bonds affirmed at 'BBB-'.

Braskem America Finance Company

--Notes due 2041 affirmed at 'BBB-'.


--Long-Term Foreign-Currency IDR affirmed at 'BBB'; Outlook Negative;

--Long-Term Local-Currency IDR affirmed at 'BBB'; Outlook Stable;

--Notes due 2018, 2022, 2023, 2024 affirmed at 'BBB'.

BFF International Ltd.

--Notes due 2020 guaranteed by BRF S.A. affirmed at 'BBB'.

Centrais Eletricas Brasileiras S.A.

--Long-Term Foreign-Currency IDR downgraded to 'BB-' from 'BB'; Outlook Negative;