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Bond Market News
Cosan Downgraded to B1 by Moody’s
July 17, 2026
– Vandit P
Cosan SA was downgraded by a notch to B1 from Ba3 by Moody’s. The downgrade reflects weak holding-level interest coverage, continued reliance on asset monetization to improve the capital structure, and reduced portfolio diversification following Raízen’s restructuring, which has materially cut dividend income to Cosan. However, Moody’s does not expect a contagion through financial obligations or liabilities. These pressures are balanced by meaningful capital structure improvements expected in 2025-26, including lower debt and interest expenses, and a portfolio anchored by Compass, Moove, Radar and Rumo. Compass remains Cosan’s main dividend source given its predictable cash generation. Moody’s expects negative holding-company free cash flow over the next 12-18 months due to elevated interest expense and lower subsidiary dividends, alongside uncertainty regarding the timing and value of future divestitures. On the positive side, Cosan’s liquidity was considered to be adequate, supported by a BRL7.7bn ($1.5bn) cash position in March, with no significant maturities until 2029. Earlier this month, Cosan was downgraded by S&P to B+.
Its 8.25% Perp traded marginally lower at 98.5 cents on the dollar.
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