Investing.com -- Fitch Ratings has downgraded the Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of Oragroup S.A. to ’C’ from ’CC’. The Viability Rating (VR) of the bank holding company (BHC) has been affirmed at ’f’.
The downgrade of the Long-Term IDRs is due to Fitch’s belief that a default or default-like process has started. This perspective comes after Oragroup entered a grace period in early May 2025 on a bank loan repayable in both euros and West African CFA francs, due to insufficient liquidity.
Fitch’s ’f’ VR for Oragroup reflects the belief that the group has failed. This is based on the expectation that Oragroup won’t be able to rectify the prolonged severe breach of its regulatory capital requirements without a core capital contribution from its existing or potential shareholders. Fitch would consider any capital contribution as extraordinary support to address a significant capital shortfall. The ’f’ VR is below the implied VR of ’ccc-’ due to capitalisation and leverage.
Fitch could further downgrade Oragroup’s Long-Term IDRs to ’Restricted Default’ (RD) if the BHC has an uncured payment default or a distressed debt exchange on senior obligations. The grace period that the BHC is in will expire at the end of May 2025. A default on short-term obligations could also lead to a downgrade of the Short-Term IDRs.
Additionally, the IDRs could be downgraded to ’RD’ if there is regulatory intervention due to the prolonged breach of capital requirements.
On the other hand, the Long-Term IDRs could be upgraded if the BHC’s liquidity improves. This could happen due to an improved ability to refinance debt payments, or if the risk of regulatory intervention reduces. The Long-Term IDRs could also be upgraded if there was sufficient proof of external liquidity support that could prevent the BHC from entering new grace periods and experiencing distressed debt exchanges.
If Oragroup receives extraordinary capital support, Fitch would upgrade Oragroup’s VR and Long-Term IDRs to a level that matches its subsequent risk profile, capitalisation and liquidity.
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