Brazilian carrier Azul’s dollar bonds fell by 8-10% after it was downgraded to CCC- from CCC+ by Fitch. The rating agency cited “high refinancing risks, operating cash flow pressure due to current and deferred leases payments, liquidity deterioration” as reasons for the downgrade. With credit conditions tightening, Azul may find it difficult to refinance its dues – Azul’s short-term maturities totaled BRL5.1bn ($mn) and cash stands at BRL 1.4bn ($mn). Its total debt stands at BRL18.8 ($mn). Also, the increase in lease payments, elevated interest rates and relatively high fuel prices are set to see Azul’s free cash flows turn negative.

Azul’s 5.875% 2024s were down 7.5 points to 61.95 and its 7.25% 2026s were down 4.2 points to 50.93.

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