S&P ups Suzano outlook to positive

S&P said is revised its outlook on Suzano Papel e Celulose SA to positive from stable. The agency also affirmed its BB+ global scale and brAA+ national scale corporate credit ratings on the company.

At the same time, S&P affirmed the BB+ issue-level ratings on financing vehicles, Suzano Austria GmbH and Suzano Trading Ltd., which Suzano guarantees.

The agency also kept its 3 recovery rating on the senior unsecured debt, indicating an expectation of meaningful (65%) recovery of the notes under a hypothetical default scenario, unchanged.

“The outlook revision reflects Suzano's solid cash flow generation stemming from a sound pulp market and a reduced capex level after the full ramp-up of the Maranhão plant,” S&P said in a news release.

In 2013, the company's adjusted net debt to EBITDA peaked at 5.5x, which dropped to 2.9x in June 2017.

“We believe the company will benefit from the further reduction of costs, thanks to the improvement of the wood supply, streamlining the production lines, and expansion of the product mix, such as Eucafluff and Tissue, which could further strengthen Suzano's competitive position and reduce exposure to commodity volatility and cash flow swings,” the agency said.

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