Research Update: Brazilian Auto Supplier Tupy Outlook Revised To Stable From Negative On Financial Metrics Recovery, Ratings Affirmed

Brazil-based auto supplier Tupy S.A. has been raising prices while its volumes have been recovering in the last months, which should contribute to continued leverage reduction during the year. We expect EBITDA close to R$1 billion this year, 50%-70% higher than the 2020 figure, also thanks to the weaker Brazilian real. Therefore, gross debt to EBITDA would likely be below 2.0x in 2021, better than our previous expectations for the company's recovery this year. As a result, on May 27, 2021, S&P Global Ratings revised the outlook on Tupy to stable from negative and affirmed the 'BB' long-term global scale and 'brAAA' national scale issuer credit ratings. At the same time, we affirmed our 'BB' issue-level rating on Tupy's senior

...- Brazil-based auto supplier Tupy S.A. has been raising prices while its volumes have been recovering in the last months, which should contribute to continued leverage reduction during the year. - We expect EBITDA close to R$1 billion this year, 50%-70% higher than the 2020 figure, also thanks to the weaker Brazilian real. Therefore, gross debt to EBITDA would likely be below 2.0x in 2021, better than our previous expectations for the company's recovery this year. - As a result, on May 27, 2021, S&P Global Ratings revised the outlook on Tupy to stable from negative and affirmed the '##' long-term global scale and 'brAAA' national scale issuer credit ratings. - At the same time, we affirmed our '##' issue-level rating on Tupy's senior unsecured notes due 2031. The recovery rating remains at '3' (65%). - The stable outlook reflects our view that Tupy's production volumes will continue recovering, given company's exposure to resilient segments and price adjustments due to the weaker real and...

Research Update