Fitch downgrades USJ

Fitch Ratings said it downgraded the foreign- and local-currency issuer default ratings of Usina Sao Joao Acucar e Alcool SA (USJ) to B+ from BB- and national scale rating to A-(bra) from A(bra).

Fitch also said it downgraded to B+ from BB- the rating on the company's $275 million senior unsecured notes due 2019. A recovery rating of RR4 also was assigned to the bond.

The outlook is stable.

The downgrades are primarily due to the company's high cash burn during its fiscal year ended March 31, 2013, Fitch said.

The ratings also reflect the company's high leverage, but manageable liquidity, the agency said.

The ratings also consider its exposure to the volatile sugar and ethanol industry and other risks inherent to the agribusiness sector, Fitch said.

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