Fitch downgrades Brazil's Votorantim Group

Fitch Ratings has downgraded the foreign currency and local currency issuer default ratings of Brazil's Votorantim Group to 'BBB-' from 'BBB'.

Fitch cited the deterioration in Votorantim Cimentos' (VCSA) operating cash flow and capital structure as one of the main factors that led to the downgrade.

The cement producer is Votorantim Group's largest subsidiary and saw difficulties in 2015 due to a rapid decline in domestic cement sales.

The agency maintained a negative outlook on the ratings.

"Fitch's base case assumptions indicate that VCSA will comprise around 50% of the Votorantim Group's Ebitda and 75% of its net debt during 2015," the rating agency said in a release. "VCSA will have an extremely difficult time reducing its net leverage to below 3.5x by 2018 as a result of Brazil's severe economic recession."

Fitch affirmed the company's national scale rating at 'AAA(bra)' with a stable outlook.

Headquartered in São Paulo, Votorantim operates in the finance, energy, mining, steel, pulp and paper industries, among others.

Its electric power generation subsidiary, Votorantim Energia, has stakes in 35 hydroelectric plants and five thermopower plants in Brazil.

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