This decision is linked to the millionaire pending tax payments of the Spanish company in Peru.
Fitch Ratings downgraded all of the ratings of Telefonica del Peru SAA (TdP) to “BB” from “BB+”. The reduction reflects the short-term materialization of the company’s tax liabilitywhich will result in a material deterioration in the company’s leverage profile, although the timing and extent of additional debt financing needed to pay tax payments remain uncertain, Fitch said.
“The company has continued to operate in an intense competitive environment amid persistent cost inflation pressures and an uncertain economic context in Peru. While TdP benefits from its scale as Peru’s largest operator, as well as its portfolio of diversified products, the FCF [Flujo de caja libre] of the company has affected its financial profile,” he said in his statement.
It should be remembered that the Supreme Court of Peru ruled in mid-January that the company must pay debts and fines for a controversy that began in 2000, an amount that could add S/3,000 million (US$782 million), according to sources close to the process. TdP has expressed its disagreement with the ruling.
The rating was applied to the Long-Term Foreign Currency (FC) Issuer Default Rating (IDR), the Long-Term Local Currency (LC) IDR, and the S/1.7 billion notes due 2027. Along with these moves, Fitch has placed all of these ratings on Rating Watch Negative (RWN).
With information from Reuters.
Source: Larepublica
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