...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. Leverage to Remain High: As of Sept. 30, 2013, the median total adjusted leverage ratio for Brazilian sugar and ethanol companies within Fitch Ratings' portfolio was 5.9x, while the median net leverage ratio was 5.4x. These measures compare unfavorably with ratios of 5.3x and 4.8x, respectively, during the same period in 2013. Depressed sugar prices and cost pressures for diesel, labor and logistics should pressure FCF. High Refinancing Risks: Four out of six companies within Fitch's portfolio of rated S&E firms show high or moderate refinancing...
