Fitch Gives Telecom Argentina a DD

Fitch downgrades foreign and local currency ratings to DD, indicating that Telecom Argentina is in default on $3.2B in debt

April 10, 2002

1 Min Read

CHICAGO -- Fitch Ratings has downgraded the foreign and local currency ratings of Telecom Argentina S.A. (Telecom) to 'DD' from 'C'. The 'DD' rating indicates the company is in default and that the recovery rate is expected to be in the range of 50%-90%. The rating action affects approximately US$3.2 billion in debt obligations.The rating action reflects the company's announced suspension of all principal payments on its debt obligations; the company intends to continue to pay interest on its obligations. However, the ability to pay interest will still depend on receiving Central Bank approval to make dollar transfers abroad, the evolution and quality of collections, as well as the future exchange rates and inflation levels, which all will affect future cash flow generation.The company's decision reflects the deepening recession, the impact of devaluation on its debt burden, the volatility associated with the peso exchange rate, the suspension of tariff adjustments and the tariff's pesofication. The foregoing items have dramatically impacted the financial condition of Telecom, given the imbalance between its peso revenues and its debt in hard currency.Fitch Inc.

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