Fitch acts on Raizen, Biosev

Fitch Ratings said it acted on the ratings of Raizen Combustiveis SA and Biosev SA following Raizen’s announcement it agreed to acquire Biosev.

The agency placed Raizen, Raizen Energia SA’s BBB long-term foreign and local currency issuer default ratings, and Raizen Fuels Finance SA’s BBB senior unsecured notes due 2027, on rating watch negative.

Fitch also placed Biosev SA’s B long-term foreign- and local-currency IDRs on rating watch positive.

“Raizen’s IDR could be downgraded if the transaction is concluded as outlined, due to higher exposure to the more volatile sugar and ethanol industry, and relatively lower exposure to the more resilient downstream business. Fitch calculates that the sugar and ethanol business will now account for approximately 70% of Raizen’s EBITDA generation, while the share of the downstream business is expected to reduce to 30%,” the agency said in a press release.

“Biosev’s ratings would likely be upgraded if the transaction is concluded with no net debt exposure using Fitch’s parent-subsidiary linkage criteria, due to strong strategic and operational links between the two companies. Biosev fits into Raizen’s strategy of consolidating its footprint in the highly fragmented S&E industry,” Fitch said.

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