OREANDA-NEWS. Fitch Ratings has downgraded the Republic of Congo's Long-Term Foreign Currency Issuer Default Rating (IDR) to 'RD' (Restricted Default) from 'C' and affirmed the Long-Term Local Currency IDR at 'C'.

The issue ratings on senior unsecured foreign currency bonds have been downgraded to 'D' from 'C'. The Short-Term Foreign and Local Currency IDRs have been affirmed at 'C'. The Country Ceiling has been affirmed at 'BBB-'.

Under EU credit rating agency (CRA) regulation, the publication of sovereign reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that Fitch believes makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status. The next scheduled review date for Fitch's sovereign rating on the Republic of Congo is 2 September 2016, but Fitch believes that developments in the Republic of Congo warrant such a deviation from the calendar and the rationale for this is laid out below.

KEY RATING DRIVERS

The downgrade of Congo's Long-Term Foreign Currency IDR to 'RD' reflects the following key rating driver and its relative weight:-

High

The Republic of Congo has failed to make a capital and coupon payment, initially due on 30 June 2016, on its US dollar notes due 2029 (ISIN XS0334989000), which were issued under a restructuring of London Club debt in 2007. The 30-day grace period has elapsed without the payment being made.

RATING SENSITIVITIES

The Long-Term IDRs do not have an Outlook.

The resumption of timely debt service on the defaulted bonds would lead to an upgrade of the IDRs. At such time, Fitch would review the ratings of the Republic of Congo and make an assessment based on the sovereign's ability and willingness to service debt.