# Raízen faces Moody’s downgrade review despite asset sale talks

*Credit metrics weaken as Moody’s questions whether planned asset sales, equity talks with Shell and Cosan can sustain investment-grade rating.*

- Published: 2025-10-31
- Section: Insights
- Tags: Cosan, moody´s, Raizen, Shell
- URL: https://brazilstockguide.com/insights/raizen-moodys-review-baa3-credit-metrics-shell-cosan/

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**By Brazil Stock Guide –** Moody’s Ratings placed **Raízen S.A.** and **Raízen Energia S.A.** under **review for downgrade** after warning that the company’s planned **asset sales, capex cuts, dividend reductions and debt management efforts — including a potential equity raise discussed between shareholders Shell Plc (Aa2 stable) and Cosan S.A. (Ba2 negative)** — may not be sufficient to preserve the company’s **Baa3 investment-grade rating** unless credit metrics improve materially.

The review reflects ongoing operational challenges from the 2024–25 harvest, marked by **negative free cash flow**, **higher gross leverage** and **strained credit indicators**. Raízen’s total debt, including leases, reached **R$72.5 billion ($13 billion)** in June 2025, translating into **Moody’s adjusted gross leverage of 7.7x** EBITDA — or **5.9x excluding FX and fair value effects**. Moody’s expects leverage to approach **5.3x by March 2026**, if debt levels remain unchanged.

The agency noted that Raízen has been working since 2024 on a broad restructuring plan to improve efficiency and cash generation, but stressed that the company needs to maintain **strong and consistent metrics** to mitigate exposure to volatile commodity markets. The sugar-ethanol segment, which requires **high capital expenditures and faces weather-related risks**, remains particularly vulnerable, with **weak sugar and ethanol prices expected through 2026–27** due to rising corn ethanol supply.

Raízen’s Baa3 rating currently sits **two notches above the Ba2 outcome indicated by Moody’s Protein and Agriculture methodology**, reflecting both its scale and the implicit support from its controlling shareholders. Still, the agency highlighted that persistent **negative free cash flow** and **high investment needs** — especially from its second-generation ethanol projects — have weakened its capital structure.

Formed in 2011 as a **joint venture between Shell and Cosan**, Raízen operates **29 sugar-ethanol mills and three 2G plants**, with a crushing capacity of 75 million tons and revenues of **R$255 billion ($45.6 billion)** in the 2024–25 harvest. The company also runs Shell-branded fuel distribution, **Brazil’s second-largest downstream operator**. Moody’s estimates revenues of **R$215 billion and EBITDA of R$13.2 billion** for the 2025–26 cycle.

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Source: Brazil Stock Guide, https://brazilstockguide.com/insights/raizen-moodys-review-baa3-credit-metrics-shell-cosan/