Tuesday, 27 January 2009

S&P Finally Does It: Votorantim Group Ratings Under Review for Downgrade

Standard and Poor's revised its outlook on Votorantim Participações SA to negative from stable. The risk of downgrading will persist for at least three months. "The outlook revision reflects the increasing uncertainty that the group's consolidated credit metrics will meet our long-term targets for the current rating amid the negative operating and financial outlook for 2009,´´said analyst Reginaldo Takara in a note released last night.

The group's main business units are already facing unfavorable pricing and market conditions, at a time when consolidated financial leverage is historically high after significant investments in capacity expansions and acquisitions. said S&P, which ''Although the difficult economy will pressure cash flow, we believe the group has room to adjust its strategy to preserve liquidity and reduce net debt, bringing cash flow coverage more in line with the current ratings,´´praised the merger between Votorantim Celulose and Aracruz, saying it may help streamline operations (??? the market thinks the opposite, dudes!)

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