Raizen S.A. has been downgraded by S&P Global Ratings and Fitch Ratings as both agencies signalled rising concerns about the company's liquidity trajectory, ability to meet upcoming debt maturities, and the prospect of a formal debt restructuring.
S&P downgraded Raizen to 'CCC+' from its prior rating and placed the company on CreditWatch Negative. In a separate action, Fitch lowered Raizen's Long-Term Foreign and Local Currency Issuer Default Ratings to 'B' from 'BBB-' and retained a Rating Watch Negative.
S&P pointed to Raizen's engagement of financial advisers as evidence of a - in the agency's view - high likelihood of debt restructuring, noting that the company's earlier signals of forthcoming capitalization and asset sales have weakened. Agency commentary said management has indicated new plans will be announced in the near term, but the absence of concrete updates suggests those initiatives are encountering obstacles.
Operationally, Raizen's preview for the third fiscal quarter showed a divergence across its businesses. The Sugar & Ethanol segment reported weaker results, while fuel distribution in Brazil displayed continuing improvements in volumes and margins. S&P's forecast for fiscal 2026 - which ends in March 2026 - includes an estimated EBITDA of around R$11 billion and pro forma leverage of roughly 5.0x-5.5x. For fiscal 2027, S&P expects persistent pressure on Sugar & Ethanol from lower volumes and depressed sugar prices, with forward contracts trading at 14-15 cents per pound, and projects EBITDA near R$11.5 billion.
On liquidity, Raizen reported a cash balance of R$18.6 billion as of September 30, 2025, and has unused revolving credit facilities totaling $1 billion, against short-term debt of R$7.4 billion. S&P cautioned that continued cash consumption without the inflows management has previously indicated could exhaust these resources within two years.
Fitch's multi-notch downgrade reflected the absence of a material capital injection by shareholders within the agreed timeframe, operating performance that fell short of expectations, and a tighter liquidity profile. Fitch projects Raizen's gross and net leverage at about 5.4x and 5.0x, respectively, across the next two years - levels the agency considers high for the sector.
Fitch also identified R$10.5 billion of debt maturing in the coming 18 months, and warned that refinancing those obligations at prevailing market rates would reduce the company's financial flexibility. The agency's financial metric forecasts include EBITDA of R$10.9 billion for fiscal 2026 and R$11.0 billion for fiscal 2027. Fitch further estimated interest expenses near R$9.5 billion and noted elevated capital expenditures, concluding that Raizen will generate negative free cash flow through 2027 under its base-case assumptions.
Both ratings actions underscore investor and creditor concerns about whether management can execute the financing and operational measures it has described in time to prevent materially weakened credit metrics. The agencies' forecasts point to sustained leverage and cash shortfalls unless management secures committed capital, completes asset sales, or achieves material, immediate improvements in operating cash flow.
What to watch next - Announcement of any definitive capital injection, concrete asset sale agreements, revised financing plans, or updates to management's timelines for resolving near-term maturities will be critical to creditor and market assessments of Raizen's credit path.