S&P lifts Empresas Copec

S&P said it raised Empresas Copec SA’s (E-Copec) issuer rating to BBB from BBB- and revised the outlook of Copec SA to positive from stable and affirmed its BBB- rating.

“After completing a high investment period, E-Copec reduced leverage to 2x as of June 2022, the lowest level in decades. Our revised projections now assume leverage will remain around 2x and that the company will report positive discretionary cash flow during 2022-2024. Our forecasts incorporate still strong pulp prices, robust demand for wood products, and strong volumes and extraordinarily high margins in the fuel business,” S&P said in a press release.

The agency noted Copec boosted volumes by about 15% in the first half 2022 compared with the first half 2021, and continues posting sales volumes well above pre-pandemic levels. “This, coupled with the high prices and cost control efforts, has increased EBITDA and reduced the debt-to-EBITDA ratio significantly to 2x in June 2022. We now expect the company to keep this ratio around 2x and overall strong credit metrics.”

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