OREANDA-NEWS. June 16, 2015. Fitch Ratings has updated its Distressed Debt Exchange (DDE) criteria report covering corporates, financial institutions, covered bonds, insurers, and global infrastructure.

Changes to the criteria have been minor and the update does not affect existing ratings. When considering whether a debt restructuring should be classified as a DDE, Fitch expects both of the following to apply: the restructuring imposes a material reduction in terms compared with the original contractual terms; and the restructuring or exchange is conducted in order to avoid bankruptcy, similar insolvency or intervention proceedings or a traditional payment default.

When an exchange or tender offer that Fitch considers to be distressed is announced, an issuer's Issuer Default Rating (IDR) typically will be downgraded to 'C' and debt issues included in the exchange will also be downgraded. Completion of the DDE typically results in an IDR being downgraded to 'Restricted Default (RD). Shortly after the DDE is completed, an IDR will be re-rated and raised to a performing level, usually still low speculative-grade. The new report updates and replaces 'Distressed Debt Exchange' dated 30 June 2014.

The updated criteria report is available at www.fitchratings.com or by clicking on the link above.