Fitch has downgraded its rating for Cimento Tupi to ‘C’ following the Brazilian cement company’s announcement that it will miss its US$9m interest payment on its US$185m of senior unsecured notes due in 2018.  The downgrade reflects Tupi's inability to pay its coupon payment which will enter a 30 day cure period on its outstanding notes, Fitch said in a statement.

Tupi hired investment bank Rothschild as its investment advisor as the company seeks relief from its high level of interest expense amid a difficult operating environment. Fitch expects Tupi will have difficulty managing its debt service over the next six-12 months due to its strained cash position, low cash generating ability, and the weakening operating environment in Brazil that has increased refinancing risk for all Brazilian corporates. According to the IBGE's Monthly Industrial Survey, Brazilian cement production through February 2015 declined 8.9 per cent due to the difficult operating conditions, Fitch highlighted.

The rating's agency also noted that Tupi's poor liquidity position has been persistent during the last 12 months and prospects are poor for improvement during 2015. "The company is reliant on banks willingness to refinance its short-term maturities due to its low cash reserves," Fitch states.