Fitch cuts Coazucar

Fitch Ratings said it downgraded Corporacion Azucarera del Peru SA’s long-term foreign and local currency issuer default ratings to B from B+. In addition, the senior notes were downgraded to B/RR4 from B+/RR4. The outlook is stable.

“The downgrades reflect weak operating performance, higher leverage, and a slower pace of deleveraging than initially anticipated due to the company’s weak operating performance following a sustained period of lower sugar prices. Fitch previously expected Coazcucar’s net debt to EBITDA ratio to reach about 4.5x by 2019. It now expects the net leverage ratio to trend toward 6.5x,” said Fitch in a press release.

Coazucar’s leverage remains high for the rating, and the path to deleveraging has been slower than Fitch previously expected due to weak international sugar prices and low profitability. Fitch sees Coazucar’s net debt to EBITDA trending to 6.5x in 2019, down from about 8.3x for the last 12 months ending Sept. 30. Fitch said it also expects to see deleveraging going forward despite the current environment of low sugar prices.

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