Overview
S&P Global Ratings has shifted its outlook on Cosan to negative from stable but maintained the company's current credit ratings. The agency pointed to risks stemming from a possible debt restructuring at Raizen, a joint venture closely linked to Cosan, as the principal reason for the outlook change.
Immediate direct impact
S&P noted that direct, immediate effects on Cosan should be limited. Cosan is not a guarantor of Raizen’s debts, and the company has recently announced early amortization of its 2029, 2030, and 2031 senior unsecured notes that include cross-default clauses. These actions reduce some near-term legal and contractual exposure related to those instruments.
Spillover risk and governance assessment
Despite the limited direct obligation, S&P expressed concern that Raizen’s debt restructuring could have indirect consequences. The rating agency said Raizen’s closeness to Cosan could curtail Cosan’s financial flexibility and access to capital markets. As a result, S&P revised Cosan’s management and governance score downward to moderately negative from neutral.
Balance sheet and liquidity
S&P acknowledged improvements in Cosan’s financial position following a December 2025 follow-on equity offering that raised R$10.5 billion. The proceeds are expected to lower gross debt to about R$12 billion, down from R$21.6 billion as of September 2025 and R$36.3 billion in December 2024. Interest expense is forecast to fall to around R$1 billion in 2026 versus an estimated R$3.0 billion in 2025. On a consolidated basis, net leverage is projected at 2.5x-3.0x in 2026, compared with 4.0x for the 12 months ended September 30, 2025 and 4.0x at the end of 2024. Cosan’s cash balance is estimated at R$6 billion, which S&P believes covers interest outlays and other cash needs.
Trigger points for a potential downgrade
S&P warned that larger-than-expected cash support for Raizen could increase Cosan’s leverage or reduce its liquidity, potentially prompting a rating downgrade. The negative outlook captures uncertainty around Raizen’s evolving capital structure and how that may alter market perception of Cosan.
Paths back to stability
The rating agency said it could downgrade Cosan if adverse developments at Raizen undermine market perception or if financial support for the joint venture materially strains Cosan’s liquidity and leverage. Conversely, the outlook could be restored to stable if Raizen’s capital restructuring does not increase Cosan’s cash outflows or materially worsen market risk perception.
Note: This article presents S&P's assessment and Cosan's reported financial metrics as stated by the rating agency.