Fitch turns Arauco outlook to stable

Fitch Ratings said it changed the outlook to stable from negative and affirmed Celulosa Arauco y Constitucion SA's long-term foreign- and local-currency issuer default ratings at BBB. The agency also upgraded Arauco's national long-term rating to AA(cl) from AA-(cl).

“The outlook revision reflects Arauco's strong operating cash flow generation due to a substantial recovery in pulp prices and increased demand and prices in the wood products division. In addition, the capital increase from Empresas Copec, and the sale of forestry assets, will allow Arauco to reduce leverage during 2021 despite still high investments in the MAPA expansion project during the year,” the agency said in a press release.

Fitch said it forecasts Arauco's net debt/EBITDA ratio to fall under 2x in 2021, with net debt declining to about $4 billion by the end 2022 from $5 billion at the end of 2020.

The national rating upgrade considers Arauco’s stronger profile within the BBB category, Fitch said.

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