...Bittersweet Year: Default risk is high within the Brazilian sugar and ethanol (S&E) industry during 2014. Capital structures are weak for several producers and FCF is tight. Concerns about the health of the sector and the small size of many producers make capital market access challenging. Brazilian producers are well positioned to benefit from growing demand over a longer time horizon, and their cost position in the industry remains unrivaled. Tight Liquidity/Refinancing Risks: Four out of six companies within Fitch's portfolio of rated S&E firms show high or moderate refinancing risks and very limited alternative sources of liquidity, like land holdings. Issuers should remain highly dependent on local credit banks, as the international debt market is likely to be tough on high-yield credits in 2014. Considering the rated issuers, only USJ (Issuer Default Rating [IDR] B+) and Grupo Virgolino de Oliveira (GVO, IDR B / Rating Watch Negative) have alternative sources of liquidity of approximately...
