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Fitch downgrades Biosev to B
Fitch Ratings said it downgraded Biosev SA's long-term foreign and local currency issuer default ratings to B from B+ and long-term national scale rating to BBB(bra) from A-(bra). Fitch revised the outlook to negative from stable.
“The downgrade reflects Biosev's escalating refinancing needs amid a scenario where free cash flow (FCF) generation is expected to remain negative, pressured by depressed sugar and ethanol prices due to the impact of coronavirus pandemic on commodity prices, and heavy investments program to improve the company's agricultural yields and crushed volumes,” said Fitch in a press release.
“Fitch projects declining operating margins and cash flows for Biosev in fiscal years 2021 and 2022, although this reduction will be partially offset by the combination of efficient hedging strategies, a flexible product mix and presence of third-party sugar cane in the mix with 40% of total raw material origination,” the agency said.
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