Fitch downgrades Oragroup’s local-currency IDRs to ’Restricted Default’

Investing.com -- On Thursday, June 5, 2025, Fitch Ratings announced a downgrade of Oragroup S.A.’s Long- and Short-Term Local-Currency Issuer Default Ratings (IDRs) to ’Restricted Default’ (RD) from ’C’. The Viability Rating (VR) of the company remains affirmed at ’f’.

The downgrade came in light of a distressed debt exchange (DDE) executed by Oragroup, extending the maturity of a short-term West African CFA franc bank loan originally due on May 28, 2025. Fitch’s decision reflects its belief that the move was necessary to avoid a payment default. This action represents a significant reduction for the creditor, considering the increased uncertainty around Oragroup’s solvency and liquidity position following Vista Group’s withdrawal from the acquisition process.

The downgrade does not affect Oragroup’s Long- and Short-Term Foreign-Currency IDRs. The ’RD’ rating reflects Fitch’s view that Oragroup may conduct further DDEs, as liquidity remains extremely tight for meeting upcoming payments in West African CFA francs due in the upcoming months.

Oragroup’s Long- and Short-Term Foreign-Currency IDRs of ’C’ were influenced by the bank holding company (BHC) entering a grace period in early May 2025 on a bank loan with repayment due in both euros and West African CFA francs due to insufficient liquidity.

The ’f’ VR indicates Fitch’s view that Oragroup has failed to address the prolonged material breach of its regulatory capital requirements without a core capital contribution by its existing or prospective shareholders. Any capital contribution would be seen as extraordinary support to address a material capital shortfall.

Fitch stated it would further downgrade Oragroup’s Foreign-Currency IDRs to ’RD’ if it believes that the BHC has experienced a payment default or a DDE on senior foreign-currency obligations or in case of regulatory intervention due to the prolonged breach of capital requirements. The Long- and Short-Term Foreign- and Local-Currency IDRs could be downgraded to ’D’ if Oragroup enters bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure or otherwise ceases business and debt is still outstanding.

On the other hand, an upgrade of the Long- and Short-Term Local-Currency IDRs would require sufficient local-currency liquidity to avoid payment defaults or further DDEs on local-currency obligations. However, without a significant strengthening of local-currency liquidity and capital, the Long-Term Local-Currency IDR is unlikely to be upgraded above ’CC’.

Finally, in case of a material improvement in Oragroup’s liquidity and the receipt of extraordinary capital support that restores viability, Fitch would upgrade its Foreign - and Local-Currency IDRs and VR to a level commensurate with its risk profile, capitalisation and liquidity.

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