Light : Rating Update Report - S&P

Research Update:

Various Rating Actions Taken On Brazilian Corporate, Infrastructure Entities On Sovereign Action, Revised Mapping Table

Primary Credit Analysts:

Luisa Vilhena, Sao Paulo (55) 11-3039-9727; [e-mail] Renata Lotfi, Sao Paulo (55) 11-3039-9724; [e-mail]

Marcus Fernandes, Sao Paulo (55) 11-3039-9734; [e-mail] Marcelo Schwarz, CFA, Sao Paulo [phone]; [e-mail]

Julyana Yokota, Sao Paulo [phone]; [e-mail]

Secondary Contacts:

Luciano D Gremone, Buenos Aires (54) 114-891-2143; [e-mail] Diego H Ocampo, Buenos Aires (55) 11-3039-9769; [e-mail]

Table Of Contents

Overview Rating Action Rationale Related Criteria

Related Research Ratings List

Research Update:

Various Rating Actions Taken On Brazilian Corporate, Infrastructure Entities On Sovereign Action, Revised Mapping Table

Overview‌

• On Aug. 15, 2017, we affirmed the foreign and local currency ratings on Brazil at 'BB', removed them from CreditWatch with negative implications and assigned a negative outlook.

• We're taking the same action on global scale rating on Brazilian

  corporations and infrastructure entities.

• We're also raising the national scale ratings on entities in the same sectors following the revision of the Brazilian national scale mapping table.

• In addition, we're removing ratings on several entities from under

  criteria observation.‌

  Rating Action

  On Aug. 16, 2017, S&P Global Ratings said that it affirmed several global scale (GS) ratings on Brazilian corporations and their issuances following the affirmation of Brazil's sovereign ratings (see "Brazil Ratings Removed From CreditWatch And Affirmed At 'BB/B'; Outlook Is Negative On Ongoing Policy Challenges," Aug. 15, 2017), and removed them from CreditWatch negative where they had been placed on May 23, 2017. At the same time, we raised many national scale ratings (NS) according to our revised mapping table for Brazil, released on Aug. 14, 2017. We also removed all NS ratings on Brazilian corporate and infrastructure entities and issuances from under criteria observation (UCO), where we had placed them on August 14.

  We also placed our GS ratings on Brazilian protein producer BRF S.A. on CreditWatch with negative implications. We expect to resolve it within the next 30 days.

  Rationale‌

  Global Scale Ratings

  The affirmation of entities' global scale ratings, which are at the same level or above the sovereign, mirrors the same rating action we took on Brazil. This is based on our unchanged view on these companies' nature and rating interactions with those on Brazil, which means that the entities whose ratings were capped by Brazil's ratings, remain capped and those whose ratings were limited at a specific number of notches above the sovereign, remain limited at the same amount of notches. Please refer to the complete list of GS ratings at

  Research Update: Various Rating Actions Taken On Brazilian Corporate, Infrastructure Entities On Sovereign

  Action, Revised Mapping Table

  the end of this report. For the rationale on the cap at the sovereign level or the maximum rating differential to the sovereign, please refer to "Ratings On Several Brazilian Corporations Placed On CreditWatch Negative Following A Similar Action On The Sovereign," published May 23, 2017.

  Although our conclusions on the gap among these entities' ratings and the ratings on Brazil have remained the same for some time, the number of notches a company could be rated above the sovereign is an ongoing assessment and could change in the future if an entity's business resilience proves to be stronger or weaker than expected. It could also change depending on the level of the sovereign rating, in order to reflect our holistic view of a company's creditworthiness.

  At the same time, we placed our GS ratings on BRF on CreditWatch negative, reflecting its weaker-than-expected performance in the second quarter of this year, and the increased chances of one-notch downgrade. We will update our base-case assumptions and reach a rating decision within the next 30 days.

  National Scale Ratings

  Following our revised Brazilian NS mapping table, published on Aug. 14, 2017, we raised NS ratings on several entities and issuances by one or two notches. We also removed all corporate credit and issuance NS ratings from UCO. The mapping table applies to all entities and issuances rated on the Brazilian national scale. Such ratings carry the prefix 'br', as in 'brBBB'. As explained in our national scale framework, to determine a national scale credit rating, we use criteria that are identical to, or consistent with, our global rating scale criteria. We typically first determine our view of creditworthiness on the global scale and then use the applicable mapping table, which shows the relationship between global and national scales, to determine a national scale credit rating.

  The rating changes are purely a result of the revision to the mapping table, with the intention of creating the most appropriate distinction among ratings on the national scale, and don't represent a change in our view of the credit quality of the issue or issuer. Please see the two lists of entities that had rating changes below and a complete list of ratings in the Ratings List, at the end of this report.

  National scale ratings that we raised by one notch:

• AB Concessões S.A.;

• Cemig Geracao e Transmissao S.A;

• Cemig Distribuicao S.A.;

• Companhia Energetica de Minas Gerais - CEMIG;

• Chapada do Piauí I Holding S.A.;

• Companhia Brasileira de Distribuicao;

• Geradora Eólica Bons Ventos da Serra I S.A.;

• Hypermarcas S.A.;

• Iguatemi Empresa de Shopping Centers S.A. (IESC);

• Iochpe-Maxion S.A.;

  Research Update: Various Rating Actions Taken On Brazilian Corporate, Infrastructure Entities On Sovereign

  Action, Revised Mapping Table

• Iracema Transmissora de Energia S.A.;

• Itapoá Terminais Portuários S.A.;

• Jalles Machado S.A.;

• Jauru Transmissora de Energia S.A.;

• JSL S.A.;

• Localiza Rent a Car S.A.;

• Lojas Renner S.A.;

• Magazine Luiza S.A.;

• Magnesita Refratarios S.A.;

• Multiplan Empreendimentos Imobiliarios S.A.;

• Natura Cosmeticos S.A.;

• Odebrecht Engenharia e Construção S.A.;

• Petroleo Brasileiro S.A.;

• Qualicorp S.A.;

• Rodovias das Colinas S.A.;

• Sao Martinho S.A.;

• Suzano Papel e Celulose S.A.;

• S.A. Usina Coruripe Acucar e Alcool;

• TAM S.A.;

• Triangulo do Sol Auto-Estradas S.A.;

• Tupy S.A.;

• Ultrafértil S.A.;

• Ultrapar Participações S.A.;

• Unidas S/A;

• Usinas Siderurgicas de Minas Gerais S.A.; and

• Votorantim S.A.

  National scale ratings that we raised by two notches:

• Auto Adesivos Paraná S.A.;

• Brasoil Manati Exploracao Petrolifera S.A.;

• BR Properties S.A.;

• Companhia Siderurgica Nacional;

• Concessionaria da Rodovia MG-050 S.A.;

• Concessionaria Auto Raposo Tavares S.A;

• Copobras S.A. Industria e Comercio de Embalagens;

• Eldorado Brasil Celulose S.A.;

• Eletropaulo Metropolitana Eletricidade de Sao Paulo S.A.;

• Gafisa S.A.;

• Grupo Bandeirantes de Comunicacao;

• Intercement Brasil S.A.;

• Investimentos e Participacoes em Infraestrutura S.A. - Invepar;

• J&F Investimentos S.A.;

• JBS S.A.;

• Klabin S.A.;

• Light Serviços de Eletricidade S.A.;

• Marfrig Global Foods S.A.;

• Metrobarra S.A.;

• Norte Brasil Transmissora de Energia S.A.;

• Rumo S.A.;

• Santa Vitória do Palmar Holding S.A.; and