The holders of debt securities issued abroad (bonds) by the sugar and alcohol producer Raízen hired financial consultancy Moelis to form an “ad hoc” group, which will conduct eventual conversations with the company about restructuring its debts, according to the report. BroadcastGrupo Estado’s real-time news system.
White & Case was also hired by bondholders. Raízen, in turn, has already signed up Pinheiro Neto Advogados and Cleary Gottlieb Steen & Hamilton LLP as legal advisors to seek solutions for its financial situation.
On average, Raízen’s bonds are being traded this Thursday, 12th, at 30% of face value, that is, with a 70% discount in relation to the nominal value. By the end of the second quarter of the 2025/2026 harvest year, Raízen’s net debt totaled R$53.4 billion, of which around R$27 billion was in bonds maturing between 2027 and 2054.
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To try to reduce this debt, Raízen – a joint venture between Cosan and Shell- tries to achieve a capital increase estimated at US$ 1 billion to US$ 1.5 billion, in addition to trying to sell assets in Argentina, which could yield another US$ 1.5 billion.
The viability of this contribution, however, is conditioned on the entry of a new partner into the business, in addition to the two controlling companies. It is a movement considered complex. When contacted, Raízen did not grant an interview as it was in a period of silence due to the release of results on Friday, the 13th.
On Monday, the 9th, the company confirmed that it began the process of hiring financial and legal advisors to assist in preparing a diagnosis of strategic options aimed at strengthening its liquidity position, optimizing its capital structure and its interaction with the market.
Raízen invested heavily in recent years to consolidate itself as a global leader in energy transition, but the timing proved inadequate. The commitment to building second-generation ethanol plants (E2G), as well as acquisitions such as Biosev, which consolidated it as the world’s largest producer of sugar and ethanol, required billions in capital.
As a large part of this debt was contracted in a scenario of lower interest rates, maintaining the Selic (base interest rate) at high levels made debt service drastically more expensive, ending its profitability.
The company bet its chips on E2G as the great technological differentiator, under the promise of transforming sugarcane bagasse into clean and profitable fuel, with an eye on exports mainly to Europe. In practice, however, the project faced a complex learning curve, with technological challenges.
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The few factories of this type built took longer than expected to reach full production capacity, and technical bottlenecks delayed the return on investment. The market classified Raízen as a high-growth “green technology” company, but operational execution ended up not keeping up with expectations.
The company halted its plan to invest R$25 billion by 2030 in the construction of several units, but part of the investment had already been made in four plants, two of which are in operation.
The sugar and alcohol sector is extremely dependent on the weather, and Raízen did not escape unscathed. Periods of severe drought, including fires in the second half of 2024, affected sugarcane crushing, reducing the efficiency of plants.
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The strategy of retaining stocks for future sale, hoping for better prices for sugar and ethanol, did not always pay off. With the recent drop in commodity prices, profit margins have evaporated, placing additional pressure on immediate cash flow.
Ample global sugar supply has also pressured prices over the past few months. Recently released data show that sugarcane crushing in the first nine months of the 2025/26 harvest was 9.2% lower than in the same period of the previous cycle. Total production of sugar and ethanol, converted into sugar equivalent, fell 10.4%.
Risk classification
Also on Monday, the risk rating agency Fitch downgraded Raízen again and maintained a negative observation, indicating that the stock could be downgraded again. S&P Global also downgraded Raízen from BBB- to CCC+ and, like Fitch, placed the rating on negative observation.
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These downgrades are in addition to the one carried out by Moody’s on November 27, which leaves it with a speculative grade for the main risk assessment agencies. At that time, Moody’s assigned a Ba1 family corporate credit rating (CFR) to Raízen and removed the Baa3 long-term issuer ratings from Raízen S/A and Raízen Energia.
S&P understands that the engagement of financial consultants, hired by the company, indicates the high probability of restructuring, which the house considers as “default”. “Management and shareholders have indicated that new plans would be announced in the near term, but the lack of concrete updates suggests that these plans are facing challenges, while leverage remains high and the company continues to experience cash burn,” the rating agency writes.
The operational side of the company, still in S&P’s view, seems unlikely to improve. Raízen recently released its operational preview for the results of the third quarter of the 2025/26 season and indicated a weaker performance in the sugar and ethanol (S&E) business.
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Despite this, S&P mentions that fuel distribution in Brazil is improving. “This should result in a lower EBITDA (cash generation) and higher leverage for fiscal year 2026 than we previously anticipated, at around R$11 billion and 5.0x to 5.5x, respectively,” says the statement.
The scenario for fiscal year 2027 indicates even weaker performance for the S&E business.
Fitch projects Raízen’s gross leverage at around 5.4 times and net leverage at 5 times in the next two years. “According to the agency’s calculations, the company has R$10.5 billion of debt maturing in the next 18 months. If this debt is refinanced based on current market rates, Raízen’s financial flexibility will weaken even further”, says Fitch, which does not expect dividend payments in the coming years.
