Bond Market News

Brazilian cement company Votorantim Cimentos International S.A.(VC) has been upgraded to Baa3 from Ba1 by Moody’s based on the strong links with parent company Votorantim and improvements in VC’s standalone credit metrics and capital structure. VC’s upgrade follows the upgrade of its parent company Votorantim’s (Votorantim or VSA, Baa3 stable). The rating agency has also upgraded its senior unsecured notes and at the same time assigned a Baa3 issuer rating to VC and withdrew its Ba1 corporate family rating. The outlook for the VC ratings is stable, reflecting Moody’s expectation that VC will manage its capital spending and dividend distributions to maintain appropriate liquidity and credit metrics, considering that VC will adopt the required adjustments in its cash outflows during downcycles. Moody’s forecasts the gross leverage to decline further to 2.0-2.5x in 2021 and to remain within the 2.5-3.5x overtime based on normalized operations. The rating agency also expects VC to maintain a conservative capital allocation and robust liquidity profile with around BRL 3bn ($593mn) in cash on a recurring basis, resulting in net leverage within the 2.0-2.5x range. VC revenues increased to BRL 18bn ($3.5bn) at the end of March 2021 from BRL 13bn ($2.5bn) in 2019, with a raised adjusted EBITDA to 24% from 22.7%. VC reported BRL 4bn ($791mn) cash on hand at the end of March. All short-term debt and all debt maturities are covered until the end of 2026.

Votorantim´s USD perps were stable with its 8.25% 2049s at 105.5, yielding 4.32%.

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