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Bond Market News
Cosan Downgraded to B+ by S&P
July 9, 2026
– Vandit P
Cosan S.A. was downgraded by a notch to B+ from BB- by S&P, citing Cosan’s weaker business profile and heavy capital structure which would require further asset sales to meet debt payments. While risks of spillover effects from Raizen’s debt restructuring have become more contained, the expected debt-to-equity conversion is set to substantially dilute Cosan’s influence over the subsidiary. Cosan has already stopped recognizing Raizen’s effects in its financials after impairment charges reduced the investment’s carrying value to zero. The loss of Raízen has altered the group’s cash flow profile and pressured interest coverage. Additionally, aggressive divestment to meet deleveraging targets could further erode group earnings going forward. Since December 2025, Cosan has amortized about BRL 9bn ($1.7bn) in debt. Howeever, this has not translated into improved coverage due to elevated financial expenses. On a consolidated basis, its liquidity is considered solid, with leverage improving. Consolidated FFO-to-debt is forecasted to improve to about 28% in 2026 from 21.1% in 2025. However, Cosan’s capital structure remains complex and costly, and S&P projects interest coverage will stay below 1x through 2026 and 2027 not including any further asset sales.
Its 8.25% Perp traded stable at 99.2 cents on the dollar.
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