Moody's rates Ipiranga bonds A3.br

Moody's America Latina said it assigned an A3.br national scale rating to Brazil-based Companhia Brasileira de Petróleo Ipiranga's proposed offering of up to R$450 million senior unsecured debentures due 2011. The outlook is stable.

Proceeds of the issuance will be primarily used to refinance existing debt.

Moody's said the debentures' rating is supported by the company's position as the second -largest fuel distribution company in Brazil and its demonstrated ability to defend and expand its market share in the Brazilian fuel distribution market while maintaining acceptable operating margins. The rating also incorporates the company's efficient logistics and strong brand recognition, as well as the improved competitive environment for the diesel and gasoline markets in Brazil.

At the same time, the rating is constrained by Ipiranga's volatile working capital needs, its high dependence on Petrobras for fuel supply, the increased capex and dividends distribution that have negatively impacted its free cash flow generation and by the fierce competition in the fast-growing ethanol market, the agency said.

Total adjusted debt to EBITDA is above 2.5x.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.