S&P revises J&F debt recovery to 3H

Standard & Poor’s said it affirmed the B+ global scale and brBBB national scale corporate credit and senior unsecured ratings on J&F Investimentos SA.

The agency also said it removed these ratings from CreditWatch positive.

The outlook is stable.

S&P also said it affirmed the brBBB rating on Eldorado Brasil Celulose SA’s debentures, which J&F guarantees.

The agency also said it revised the recovery rating on J&F’s debt and Eldorado’s senior unsecured notes to 3H from 4H, indicating 50% to 70% expected default recovery.

The ratings follow an analysis of the final financing structure for the R$2.75 billion acquisition of Alpargatas SA, S&P said.

J&F entirely financed the transaction with a seven-year maturity syndicated loan with Vigor Alimentos SA’s shares pledged as collateral, the agency explained.

The Alpargatas addition to J&F’s portfolio diversifies and strengthens the latter’s portfolio because the apparel company is publicly traded and has a mature business with a light balance sheet, S&P said.

But J&F’s debt profile concentrated in short-term maturities and high interest expenses continue to constrain its liquidity and ratings, the agency said.

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