S&P rates Bahia Sul notes BB+

S&P said it assigned a BB+ debt rating to Bahia Sul Holding GmbH's proposed 10-year senior unsecured notes for up to $700 million with a recovery rating of 3, indicating 50% to 70% expected default recovery.

Bahia Sul is a wholly-owned subsidiary of Suzano Papel e Celulose SA.

The latter will unconditionally and irrevocably guarantee the notes.

Suzano is expected to use the proceeds mostly for refinancing purposes or finance investments, S&P said.

The BB+ rating on Suzano incorporates its advantageous cost structure for pulp production thanks to its access to highly productive forests and its solid position in the global and Brazilian pulp markets for uncoated and coated printing and writing paper and paperboard, the agency said.

These factors offset pulp price volatility, which is expected to remain significant in the next few years, S&P said.

The ratings also reflect Suzano's stronger capital structure and lighter balance sheet following the ramp-up of Suzano's 1.5 million ton pulp mill in Maranhao, the agency said.

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