Moody’s downgrades Cosan notes to Ba3

Moody's Investors Service said it downgraded the ratings of the notes issued by Cosan Overseas Ltd. and Cosan Luxembourg SA and guaranteed by Cosan to Ba3 from Ba2.

At the same time, Moody's America Latina affirmed Cosan SA Industria e Comercio's Ba2 global scale and A1.br national scale corporate family ratings.

The outlook was revised to negative from stable, because the company's corporate family rating directly derives from the ratings of its subsidiaries Raizen (Ba1 negative) and Comgas (Ba2 negative), both of which are constrained by the Brazil sovereign bond ratings (Ba2 negative).

Moody’s said the downgrade of the ratings of Cosan's senior unsecured notes to Ba3 reflects the recent downgrades of Raizen to Ba1 from Baa3 and Comgas to Ba2 from Baa3, both with a negative outlook. The bulk of Cosan's cash generation come from dividends from Raizen and Comgas and, consequently, the agency sees the debt at Cosan’s level as structured subordinated to the debt at the operating companies.

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