S&P rates Natura, notes BB

S&P said it gave Natura&Co. Holdings SA BB global scale and brAAA national scale ratings. The agency also assigned a BB global scale issue-level rating to the proposed senior unsecured notes of Natura Cosmeticos SA, which will be guaranteed by the parent company, Natura&Co.

Concurrently, S&P affirmed the BB- issue-level rating on subsidiary Avon Product Inc.'s unsecured notes and BB and brAAA issue-level ratings on Natura Cosmeticos’ unsecured notes and debentures.

“Natura & Co has a robust balance sheet, large liquidity cushion, and strong commitment to keeping leverage controlled, all of which support its credit profile,” the agency said in a press release.

The recovery ratings of all unsecured debt of the group is now 3(65%), slightly higher than the agency’s previous assessment following the prepayment of Avon's 2022 secured notes with the cash proceeds of the equity follow-on concluded in the fourth quarter of 2020, S&P said.

The outlook is stable. “The stable outlook reflects our expectation that Natura&Co will maintain current strong credit metrics and healthy liquidity to cushion potential volatility from the pandemic and to fully integrate and gradually revamp Avon. We forecast that Natura&Co will post debt to EBITDA close to 2x in 2021 and close to 1.5x afterward, and funds from operations (FFO) to debt above 35%,” the agency said.

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