Moody's rates Ipiranga notes Ba1

Moody's Investors Service said it assigned Ba1 and Aaa.br ratings to Ipiranga Produtos de Petróleo SA (Ipiranga)'s proposed up to R$900 million senior unsecured debentures due in 2023 and 2025.

The notes will be irrevocably and unconditionally guaranteed by Ultrapar Participações SA.

The outlook is stable.

The proposed debentures will be fully subscribed by Vert Companhia Securitizadora and will back an issuance of agribusiness certificates – CRA (Certificados de Recebíveis do Agronegocio).

The proceeds will be directed to finance purchases of ethanol, Moody's said.

With the increased financial flexibility, Ultrapar will pay down debt in order to complement its liability management strategy, the agency explained.

Ultrapar's ratings reflect the company's solid business model, low-risk profile, stable cash flow and leading positions in different segments, Moody's said.

Over the past few years, the company has demonstrated its ability to continue increasing sales and to sustain conservative credit metrics and consistent cash generation despite adverse market conditions and a sizable capital spending plan, the agency said.

The ratings are constrained by the government of Brazil's Ba2 rating, Moody's said. The company's high capital spending, acquisitive growth strategy and dependence on a few key suppliers for raw materials are also credit negative factors, along with the cyclical nature of its specialty chemicals business, the agency said.

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