Fitch gives Arauco notes BBB

Fitch Ratings said it assigned an expected rating of BBB to the proposed note issuance by Celulosa Arauco y Constitucion SA (Arauco).

The company currently has a foreign currency issuer default rating of BBB.

Proceeds, which are expected to total up to $500 million, will be used for debt refinancing among other general corporate purposes.

Fitch said Arauco's ratings are supported by its strong business position and financial profile. The company is the second largest market pulp company in the world and has one of the lowest cost structures in the industry, which allows it to generate strong operating cash flows during market downturns. Arauco's competitive cost advantage is viewed to be sustainable due to its productive forest plantations.

The company's forestry advantages are further enhanced by its modern production equipment, energy self-sufficiency and low transportation costs due to the close proximity of its plantations, mills and ports, the agency said.

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