Fitch: Biosev view negative

Fitch Ratings said it affirmed Biosev SA’s foreign- and local-currency issuer default rating at BB- and national scale rating at A+(bra).

Fitch also said it removed the ratings from Rating Watch negative and assigned a negative outlook.

The negative outlook incorporates the challenges the company still has over the new crop year to achieve free cash flow break-even and improve its credit profile amid a scenario of depressed sugar and ethanol prices, Fitch said.

The company will continue to invest in planting and crop care to improve agricultural yields and raise capacity utilization that translates into higher operating cash flows, the agency said.

Prices for sugar and ethanol are expected to remain under pressure despite improvements on the ethanol industry dynamics in 2015, Fitch said.

The company is also exposed to weather conditions, which have been favorable in early 2015, the agency said.

The ratings also consider the company’s persistent high leverage and its large crushing capacity, which offers significant competitive advantages within the sugar and ethanol industry in Brazil, Fitch said.

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