Moody's gives Brazil Raizen global Baa3, national Aaa.br ratings

Jul 11, 2012 - Moody's yesterday assigned a Baa3 global scale and Aaa.br national scale issuer ratings to Brazilian sugar and ethanol producer Raizen.
The ratings outlook is stable.
This has been the first time that the agency rates the sugar and ethanol joint venture of Brazilian sector player Cosan (SAO:CSAN3) and Anglo-Dutch oil major Shell (AMS:RDSA, LON:RDSA).
According to Moody's report, the Baa3 rating reflects Raizen's good credit metrics and solid position in both the upstream and downstream fuel segments in Brazil.
Local sugar-ethanol operations provide the potential for higher margins and growth over the next several years, while the fuel distribution sector is a source of stable financial performance and cash generation, the agency stressed.
The ratings also take into account the positive projections for sugar and ethanol prices in the global market.
As drawbacks, Moody's cites the volatility of the sector, representing nearly two-thirds of of the company's earnings before interest, taxes, depreciation and amortisation (EBITDA). Weather factors and government incentives in other countries may affect Raizen's production, the agency noted.

Rating agency website: www.moodys.com

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