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Bond Market News
Raizen Becomes a Fallen Angel after its Downgrade to Ba1 by Moody’s
November 28, 2025
Raizen was downgraded from its IG-rating of Baa3 to a HY-rating of Ba1 by Moody’s, making it a fallen angel. The downgrade reflects Raízen’s weakened credit profile, including high leverage, sustained negative free cash flow, and limited prospects for a near-term recovery to investment-grade metrics. Persistent pressure from large capex needs in the sugar-ethanol business, exposure to weather risks, and expectations of weaker sugar and ethanol prices through the 2025–27 harvests are said to be weighing heavily on financial performance. Raízen ended September 2025 with BRL 76.8bn ($14.3bn) in debt. Despite announcing asset sales and seeing an EBITDA of BRL 13.3bn ($2.5bn), leverage is expected to remain elevated at around 5.4x by March 2026. Moody’s review will focus on measures to repair the capital structure, including a potential equity injection under discussion between shareholders Shell Plc and Cosan S.A., as well as further asset sales. Raízen has progressed in cutting costs, reducing capex, divesting assets, and extending debt maturities, but these are not yet sufficient to restore balance-sheet strength, Moody’s noted. Besides, they added that governance played a central role in the rating action, as the current stress stems from prior aggressive, debt-funded expansion.
Raizen’s dollar bonds traded stable with its 6.45% 2034s at 86.7, yielding 8.7%.
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