S&P ponders Chile’s Iansa Downgrade

S&P has revised its outlook on the Chilean sugar and agribusiness producer Iansa (BB+) to negative from positive. “The action reflects the higher-than-expected deterioration in the company’s financial metrics as a result of weaker cash-flow generation levels and greater use of debt to finance increased working capital needs (related to the merger with Jugos Concentrados) and capital expenditures,” says the agency. Financial metrics are expected to remain weak as a consequence of lower profitability levels in the sugar business given a reduction in sugar volumes produced in the domestic market that present higher margins than imports, the agency says. “The negative outlook reflects the short to medium-term challenges of improving financial metrics in a context of increased working capital needs, relatively high capital expenditure levels, and still relatively weak cashflow generation levels,” adds S&P.