S&P upgrades Aventine

Standard & Poor's said that it raised its corporate credit rating on Aventine Renewable Energy Holdings Inc. to B- from CCC+.

The outlook is stable.

The upgrade follows the positive regulatory developments in the industry, most importantly, the long-awaited Energy Policy Act of 2005, said S&P credit analyst Elif Acar, in a news release. The new law raises the renewable fuel requirement, through a series of step ups, to 7.5 billion gallons per year by 2012.

S&P also said that the company's high leverage and the refinancing risk in 2011, beyond the expiration of the 51 cents per gallon tax credit granted to ethanol users, increase default risk greatly and limit upgrade potential.

Furthermore, the company remains susceptible to adverse price movements in the ethanol and grain markets and the ratings may be lowered to the CCC category again should adverse price movements occur for an extended period, leaving the company vulnerable to nonpayment of interest on its bonds.

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