Moody's assigns MC Brazil notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to MC Brazil Downstream Trading Sarl’s planned $1.8 billion of Reg S / 144 A senior secured notes due 2031. This is the first time Moody's is rating MC Brazil.

The proceeds will be either used as cash collateral for the acquisition funding bridge loan or to fund an export prepayment facility with MC Brazil Downstream Participacoes SA or the project company. The project company is buying the Landulpho Alves cluster or RLAM. This asset will guarantee the notes.

The project company plans to use the proceeds received under the EPF for general corporate purposes, including to finance its oil refining business, to pay its debt and fund working capital needs.

“The Ba3 rating reflects the strong competitive position of the RLAM cluster, underpinned by its operating asset features and strategic location in the state of Bahia, Northeast of Brazil. Supporting the rating is Moody's currently positive industry outlook to the global oil refining and marketing activities, driven by a rebound in pent-up demand in 2021-2022, favorable price momentum and an expectation for margin recovery with reduction in idle capacity,” Moody’s said in a press release.

On the negative side, the agency noted significant exposure to merchant risk and low visibility into the future offtake profile, leading to reduced predictability of future cash flows.

The outlook is stable.

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