OREANDA-NEWS. Fitch Ratings has downgraded the Republic of Congo's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) to 'C' from 'B'.

The issue ratings on senior unsecured foreign currency bonds have also been downgraded to 'C' from 'B'. The Short-Term Foreign and Local Currency IDRs have been downgraded to 'C' from 'B'. The Country Ceiling has been affirmed at 'BBB-'.

Under EU credit rating agency (CRA) regulation, the publication of sovereign reviews is subject to restrictions and must take place according to a published schedule, except where it is necessary for CRAs to deviate from this in order to comply with their legal obligations. Fitch interprets this provision as allowing us to publish a rating review in situations where there is a material change in the creditworthiness of the issuer that Fitch believes makes it inappropriate for us to wait until the next scheduled review date to update the rating or Outlook/Watch status. The next scheduled review date for Fitch's sovereign rating on the Republic of Congo is 2 September 2016, but Fitch believes that developments in the Republic of Congo warrant such a deviation from the calendar and the rationale for this is laid out below.

KEY RATING DRIVERS

The downgrade of Congo's IDRs to 'C' reflects the following key rating driver and its relative weight:-

High

The Republic of Congo has failed to make a capital and coupon payment, initially due on 30 June 2016, on its US dollar notes due 2029 (ISIN XS0334989000), which were issued under a restructuring of London club debt in 2007. The 30-day grace period will end on 30 July 2016.

RATING SENSITIVITIES

The Long-Term IDRs do not have an Outlook. Fitch will review the Republic of Congo's ratings after the expiry of the grace period. If the payment is not made on time, Fitch will downgrade the Long-Term Foreign and Local Currency IDRs to Restricted Default (RD) and the relevant securities to 'D' (Default).