Brazilian sugar giant Raízen launches $12.6 billion debt restructuring, BNP Paribas holds the largest debt with $800 million

Brazilian sugar and ethanol producer Raízen’s off-market debt restructuring process has reached a critical stage, with exposures of several international and domestic financial institutions being disclosed one after another.

According to documents released by Raízen on Wednesday, the largest creditors of the company include BNP Paribas, Brazil’s Banco Bradesco SA, and the Dutch cooperative bank Rabobank.

Raízen has agreed to initiate an out-of-court debt restructuring process involving approximately 65 billion reais (about $12.6 billion), suspending repayments and giving itself 90 days to seek creditor support for a more comprehensive restructuring plan.

The restructuring may involve options such as shareholder capital injections, debt-to-equity conversions, or asset sales.

Raízen is jointly owned by Shell and Cosan SA. The disclosure of creditor lists provides a clearer picture of the scale of risk borne by various financial institutions amid this large-scale debt crisis.

BNP Paribas leads in exposure, with multiple banks holding over 2 billion reais each

According to documents from Raízen, BNP Paribas, headquartered in Paris, has a debt exposure of approximately 4.2 billion reais (about $810 million), making it the largest single bank creditor known.

Banco Bradesco, Spain’s Banco Santander SA, Rabobank, and Japan’s Sumitomo Mitsui Banking Corp. each hold about 2 billion reais in debt (all converted to local currency).

Meanwhile, Itaú Unibanco Holding SA’s exposure exceeds 1 billion reais. Itaú Unibanco is the largest private financial group in Brazil and the entire Southern Hemisphere.

The trustee bank, Bank of New York Mellon, is listed as a creditor with an equivalent of about 26 billion reais, but this figure typically reflects the assets managed on behalf of bondholders as a trustee.

Securitization company True Securitizadora is also among the largest creditors, holding about 6.4 billion reais. This securitization entity structures agricultural receivables certificates (CRA), a relatively new type of fixed-income security widely used to finance Brazil’s agricultural sector.

Raízen’s Dilemma

Raízen was once a leading company in Brazil’s biofuel industry but is now mired in financial distress.

High interest rates, consecutive poor harvests, and large upfront investments that have yet to generate returns have eroded the company’s debt repayment capacity.

The company’s dollar-denominated bonds have fallen to levels typically signaling distress, and its credit rating has been sharply downgraded to deep junk status.

Meanwhile, concerns over the scale of its debt continue to rise, and negotiations for support from major shareholders have been delayed, further fueling investor worries about the company’s prospects.

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