By Brazil Stock Guide – Fitch Ratings downgraded Raízen S.A. (B3: RAIZ4) and Raízen Energia S.A. to BBB- from BBB, placing all international ratings on Rating Watch Negative as rising leverage and weaker-than-expected operating cash flow threaten the group’s balance sheet. The move covers Raízen Fuels Finance’s senior unsecured notes maturing between 2027 and 2054, now also at BBB-.
Fitch said the downgrade reflects a deteriorating capital structure driven by higher debt and sluggish cash generation through March 2026. Without significant asset sales or fresh equity, net leverage should remain around 4.0 times for an extended period, inconsistent with a BBB rating. Controllers Cosan S.A. and Shell plc are in advanced talks over a capital injection that may involve a third investor, a resolution Fitch expects “in the short term.”
The agency’s base case projects EBITDA of R$ 11.9 billion and negative CFFO of R$ 4.3 billion in fiscal 2026, before improving modestly in 2027. High interest costs and capital expenditures—estimated at 4.1% of revenue this year—should keep free cash flow negative until 2027, while dividends are not expected. Asset disposals totaling R$ 4.1 billion have been announced, but larger transactions remain uncertain.
Despite the pressure, Fitch highlighted Raízen’s strong market positions in sugar, ethanol, and fuel distribution, which provide scale and diversification unmatched in Brazil. The company’s exposure to Shell’s global network and Cosan’s infrastructure portfolio still underpin its investment-grade standing, three notches above biofuel peer FS Bioenergia (BB-/Stable).
The Rating Watch Negative signals risk that deleveraging may not materialize soon. A sustained failure to secure new equity or allocate asset-sale proceeds to debt reduction could trigger another downgrade, Fitch said. Conversely, leverage below 2.5× through equity infusions and divestments could restore the outlook to stable.
As of June 30, 2025, Raízen held R$ 15.7 billion in cash against R$ 63.7 billion in total debt, with only R$ 4.6 billion maturing short-term. Two unused revolving credit lines totaling US$ 1 billion, due 2026 and 2027, support liquidity.
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