OREANDA-NEWS. Fitch Ratings has downgraded the ratings of Automotores Gildemeister S.A.'s (AG) as follows:

--Foreign currency Issuer Default Rating (IDR) to 'RD' from 'C';
--Local currency IDR to 'RD' from 'C'.

Fitch has also affirmed the ratings for AG's unsecured notes as follows:

--US$400 million unsecured senior notes due in 2021 at 'C/RR4';
--US$300 million unsecured senior notes due in 2023 at 'C/RR4'.

KEY RATING DRIVERS

The downgrades follow the expiration of the 30-day grace period after the non-payment of the company's interest payments for its 8.250% May 2021 bond. The bond's interest payment was due on Nov. 24, 2015 with the 30-day grace period expiring on Dec. 24, 2015.

In addition, on Dec. 18, 2015, AG launched a tender offer for the bonds. The company is asking holders of existing unsecured notes to tender their existing unsecured notes for new senior secured notes in an aggregate amount of US$450 million, representing a 35% reduction in principal. The new notes would be denominated and payable in U.S. dollars and mature on May 23, 2022 provided 97% of the aggregate outstanding principal amount of the 2021 notes has been tendered. Interest on the new senior secured notes would be at a rate of 7.50% per annum versus the rates of 8.25% and 6.75% on the original US$400 million notes due in 2021 and US$300 million notes due in 2023, respectively.

AG has the right to capitalize the interest at a rate of 10.00% per annum (payment-in-kind) on the interest payment date for interest payment dates occurring in the first 24 months after the settlement date of the exchange offer as permitted under the terms and conditions of the new senior secured notes. If the proposed tender offer is completed, Fitch will assign a rating to the new notes and raise AG's IDRs to a performing level, usually still low speculative grade.

RATING SENSITIVITIES
The company's IDRs and debt ratings will be reviewed once it announces and executes the next steps related to its debt restructuring process.

FULL LIST OF RATING ACTIONS

Fitch has downgraded the ratings of Automotores Gildemeister S.A.'s (AG) as follows:

--Foreign currency Issuer Default Rating (IDR) to 'RD' from 'C';
--Local currency IDR to 'RD' from 'C';

Fitch has also affirmed the ratings for AG's unsecured notes as follows:

--US$400 million unsecured senior notes due in 2021 at 'C/RR4';
--US$300 million unsecured senior notes due in 2023 at 'C/RR4'.