Fitch Affirms AgeRio's IDR & Revises Outlook to Negative Following Action on Parent

Fitch Ratings has affirmed Agencia de Fomento do Estado do Rio de Janeiro S.A.'s (AgeRio) Issuer Default Ratings (IDRs) and National Ratings and revised the Outlook on the long-term Foreign Currency and Local Currency IDRs to Negative from Stable. The Rating Outlook on the long-term National Rating remains Stable. A full list of rating actions follows at the end of the release.

KEY RATING DRIVERS - IDRS, NATIONAL RATINGS, SUPPORT RATINGS

The rating action mirrors the recent revision of the Outlook on the IDRs of Agerio's parent, the State of Rio de Janeiro (ERio, long-term Foreign Currency and Local Currency IDRs 'BBB-'/Negative Outlook). (See 'Fitch Revises Outlook on Brazilian Subnationals to Negative on Sovereign Revision', dated April 14, 2015 at 'www.fitchratings.com' for more details.) The revision on ERio followed the same rating action on Brazil's sovereign Outlook.

AgeRio's ratings are driven by expected support from ERio and equalized to those of its parent. Its Support Rating of '2' reflects Fitch's view that the probability of support would be high, in case of need. Fitch does not assign a Viability Rating to AgeRio, as it is a development agency.

Fitch views AgeRio as strategically important for ERio, as it acts as the state's development arm and implements its economic development policies. ERio controls 99.99% of AgeRio. Furthermore, by state law, ERio's its stake in AgeRio's voting shares cannot fall below 51%, and it is the financial agent or administrator of three state funds. A track record of frequent capital injections by ERio reinforces Fitch's view. According to Fitch, AgeRio's small size in relation to the GDP and the budget of ERio and budget, makes the cost of potential support relatively low and increases ERio's propensity to support AgeRio.

RATING SENSITIVITIES - IDRS, NATIONAL RATINGS, SUPPORT RATINGS

Changes in Parental Support: AgeRio's ratings are aligned with those of ERio. Therefore, any further changes in ERio's ratings or Rating Outlooks, or willingness to provide support to AgeRio, or in Fitch's evaluation of AgeRio's strategic importance to its parent, would result in changes in AgeRio's ratings.

Fitch has taken the following rating actions:

--Foreign and Local Currency long-term IDR affirmed at 'BBB-', Outlook revised to Negative from Stable;

--Foreign and Local Currency short-term IDR affirmed at 'F3';

--Long-Term National Rating affirmed at 'AA-(bra)', Outlook Stable;

--Short-Term National Rating affirmed at 'F1+(bra)';

--Support Rating (SR) affirmed at '2'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Non-Bank Financial Institutions Rating Criteria' (March 20, 2015);

--'National Ratings Criteria' (Oct. 30, 2013).

Applicable Criteria and Related Research:

Global Non-Bank Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863584

National Scale Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=983067

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.