OREANDA-NEWS. Fitch Ratings has assigned Sul America S. A.'s (SASA) fourth issuance of simple, unsecured and non-convertible debentures a final rating of 'A+(bra)'.

The final rating is in line with the expected rating that Fitch assigned to the debentures on Nov. 10, 2016 (see 'Fitch Expects to Rate Sul America S. A.'s Fourth Debenture Issuance 'A+(bra)').

KEY RATING DRIVERS

The final rating of the fourth debenture issuance is one notch below SASA's Long-term National Rating and equivalent to the existing rating of the first and third debenture issuances. As per Fitch's rating criteria, the one-notch difference reflects the typical notching in a ring-fenced regulatory environment where the baseline recovery is 'below average'.

SASA's fourth debenture issuance totals BRL500 million and has two tranches. The first tranche (BRL206 million) will expire in December 2019 and the second (BRL294 million) in December 2021. Coupons will be paid semi-annually. The principal of the first tranche will be paid at maturity, while the principal of the second tranche will be paid in three equal instalments from the third year onwards.

The proceeds will be used to strengthen the company's liquidity levels and general corporate purposes.

RATING SENSITIVITIES

The ratings of SASA's debentures are linked to its issuer ratings. Therefore, any changes in SASA's ratings would affect the debentures' ratings.

In case of an additional downgrade to Brazil's sovereign ratings, SASA's Issuer Default Ratings (IDRs) would be subject to a review that could result in a range of rating actions from affirmation to a two notch downgrade, based on Fitch's insurance rating criteria, which allows flexibility on how sovereign considerations are factored into insurance rating notching. The ultimate decision would be driven by the rationale for the sovereign rating action and Fitch's view of how this impacts SASA's operating environment, investment risk and overall creditworthiness.

In addition, a sustained and material deterioration in profitability, the deterioration of the liabilities/equity ratio to above 5.0x; an increase in the financial leverage to above 25% for a sustained period; a fall in the interest coverage ratio to below 3.0x; or a significant reduction in the holding's liquidity, could negatively affect the ratings of SASA and its debt issuances.

Fitch currently rates SASA as follows:

--Long-term Foreign and Local Currency IDRs 'BB-'; Outlook Negative;

--Short-Term Foreign and Local Currency IDRs 'B';

--National Long-term Rating 'AA-(bra)'; Outlook Negative;

--National Short-term Rating 'F1+(bra)';

--National Long-term Rating of first and third debenture issuances 'A+(bra)'.