-Bulgaria's Petrol moves down on Fitch's rating scale.
BANKING AND CREDIT NEWS-September 16, 2011--Bulgaria's Petrol moves down on Fitch's rating scale(C)2011 M2 COMMUNICATIONS http://www.m2.com
16 September 2011 - Fitch lowered on Friday to C from CC the long-term issuer default rating (IDR) of Bulgaria-based fuel distributor Petrol AD (BUL:5PET).
At the same time, the agency cut the unsecured rating on the company's EUR98.8m (USD136.2m) notes due on 26 October 2011 to C from CC. The notes carry a recovery rating of 4.
The downward revision follows the company's recent proposal to bondholders to extend the outstanding notes' maturity date by three months to 26 January 2012, the service specified. In addition, Petrol also offered bondholders to delay the interest payment due on 26 October 2011 by three months to 26 January 2012, together with further accrued interest to that date.
The proposal will be voted at a bondholders' meeting slated for 5 October 2011. If the bondholders meeting passes the resolution to prolong the maturity date by three months, Fitch would consider this as a distressed debt exchange.
In Fitch's opinion, if bondholders do not approve the company's plan to extend the maturity date, the risk of default enhances on condition that by that time Petrol does not unexpectedly secure funding for the notes repayment at the original maturity date. Another concern is the company's initial plan to refinance the maturing bond with bank funding may be delayed.
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