Moody's cuts Raízen to Caa3 on high debt

Moody's Ratings downgraded Raízen from Caa1 to Caa3 while maintaining a negative outlook. The agency cited the company's elevated debt burden and persistent negative free cash flow. It also lowered the rating on $187 million of senior unsecured notes due in 2027, issued by Raizen Fuels Finance and backed by Raízen and Raizen Energia.

The downgrade follows restructuring measures announced by the company on March 4. These include a potential capital injection of R$ 3.5 billion from Shell and an additional R$ 500 million contribution from Rubens Ometto, controller of Cosan. Raízen also indicated options to convert debt into equity, extend debt maturities, or start an extrajudicial restructuring to negotiate consensually with creditors. Moody's warned that these steps raise the likelihood of a distressed debt exchange or a default-like event.

Moody's noted weaker-than-expected operational performance in sugar and ethanol, where lower crushing volumes and reduced cost dilution continue to squeeze margins. The agency projects leverage will finish the 2025–2026 harvest cycle above 5.9 times, with free cash flow remaining negative. The joint venture between Cosan and Shell still maintains a relevant footprint in Brazilian fuel distribution and sugarcane production, but Moody's does not currently factor direct shareholder financial support into the rating.