Fitch rates Tonon notes B

Fitch Ratings said it assigned B foreign- and local-currency issuer default ratings to Tonon Bioenergia SA and a B/RR4 rating to its $200 million proposed senior notes due 2020. The outlook is stable.

Proceeds will be used to prepay existing senior secured debt and for working capital needs.

The agency said Tonon's ratings reflect the limited scale of its businesses and the company's exposure to the cyclical sugar and ethanol industry.

The ratings also incorporate Tonon's sizeable investment plans for the upcoming years, which should pressure the company's free cash flow, Fitch said. In the agency's view, this risk is somewhat mitigated by the expectation of manageable leverage levels and adequate debt maturity profile.

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