S&P rates Eldorado International notes B+

S&P said it assigned its B+ debt rating to Eldorado International Finance GmbH’s proposed senior unsecured notes for up to $500 million, with a recovery rating of 3, which indicates an expectation of a meaningful recovery (50%-70%, in the higher range of the band) of the notes under a hypothetical default scenario.

Eldorado Finance is an indirect wholly owned subsidiary of Eldorado Brasil Celulose SA (Eldorado; B+/stable/B). The latter will unconditionally and irrevocably guarantee the notes.

S&P expects Eldorado to use the proceeds from the notes to retire part of its short-term debt, specifically advance exchange contracts, which represent close to 45% of the balance as of March 31, 2016.

“Our B+ corporate rating on Eldorado also incorporates its competitive cost structure thanks to its access to highly productive forest, a new state-of-the-art production facility, and efficient logistics. On the other hand, the rating reflects the company's narrow range of business units and productive assets, and smaller scale than those of its global peers,” S&P said in a news release.

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