World's top sugar maker shuts large Brazil plant to cut debt
(Reuters) -Raizen SA, the world's largest sugar producer, said on Tuesday that it was shutting down for an indefinite period one of its largest plants in Brazil, the Santa Elisa mill, as the company continues to adopt measures to deal with a large debt load.
Raizen, which is controlled by Shell and Brazilian conglomerate Cosan SA, said that as a result of the plant's closure it had entered into agreements with six sugar companies to sell 3.5 million metric tons of sugarcane that would be processed by the Santa Elisa mill.
It said the sale of that sugarcane would bring in 1.045 billion reais ($188.18 million) that Raizen will use to cut its debt of over 30 billion reais.
The Santa Elisa mill was a historical site for the Brazilian sugar and ethanol industry. The plant was founded 90 years ago in the main sugar belt of Ribeirao Preto, and helped consolidate Brazil's position as the world's largest sugar exporter.
Its past owners were behind the political movement in the 1970s to create Brazil's ethanol program, called Proalcool, in a time when the world was struggling with record high oil prices.
CEISE Br, an association of equipment makers for the sugar and ethanol industry, said the closure of Santa Elisa was worrying for the segment.
"There are concerns about the impact of this action in the industry, particularly regarding ongoing contracts for maintenance, technical support and supply of equipments in the current crop," it said.
Raizen sold one of its plants in May and has offered other assets to competitors in Brazil as it tries to cut debt.
The company's woes happen in a moment of weak sugar prices, with benchmark raw sugar futures on the ICE exchange having hit a four-year low in June.
($1 = 5.5531 reais)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
6 minutes ago
- Bloomberg
Codelco Advances Rescue Efforts for Trapped Chile Mine Workers
Codelco is stepping up its rescue efforts for five workers who remain trapped deep underground at the Chilean state-owned copper company's El Teniente mine but an official said the workers there may be safe. The world's biggest copper supplier halted production at the site, located south of Santiago, after a collapse attributed to seismic activity on Thursday trapped workers in a new section of the mine, called Andesita, that had just begun production.
Yahoo
33 minutes ago
- Yahoo
Reeves making bigger mistakes than Truss, says Badenoch
Sir Keir Starmer and Rachel Reeves are making 'even bigger mistakes' than Liz Truss and have not learnt the lessons of her mini-budget, Kemi Badenoch has warned. Writing in The Telegraph, the Tory leader accuses the Government of taking Britain's finances 'to the brink' over concerns that it is pushing the country into a 'debt spiral'. Comparing Labour to Ms Truss marks Mrs Badenoch's first major public criticism of the former Conservative prime minister, whose tax-cutting 2022 mini-budget was followed by a market meltdown. Mrs Badenoch says: 'For all their mocking of Liz Truss, Keir Starmer and Rachel Reeves have not learnt the lessons of the mini-budget and are making even bigger mistakes. 'They continue to borrow more and more, unable and unwilling to make the spending cuts needed to balance the books.' Her comments are a bid to blunt Labour's continued efforts to pin Britain's current economic woes on the Tory legacy of Ms Truss's premiership. Almost three years on, Ms Reeves and Sir Keir still regularly resort to blaming the mini-budget for unpopular decisions on tax and spending. But the remarks also risk reopening old wounds within the Tories, with some allies of Ms Truss arguing that she had the right vision for a low-tax economy. A source close to Liz Truss told The Telegraph: 'Kemi has not learned the lessons of the Mini Budget, which is that when Conservative MPs fail to back tax cuts, fracking and welfare restraint, they get booted out of office. 'The Bank of England has since admitted that two thirds of the market movement in 2022 was down to their failure properly to regulate pensions. 'Kemi needs to do the work and actually look at what happened in 2022 and hold the Bank of England to account.' The former Tory prime minister has said it was failures by the Bank of England, rather than her tax cuts, which led to the subsequent financial turmoil. Her supporters have also pointed out that borrowing costs on Government bonds have risen to a higher level now than in the aftermath of the mini-budget. In her now infamous mini-budget in September 2022, Ms Truss and Kwasi Kwarteng, the chancellor at the time, announced a series of surprise tax cuts, including the abolition of the top 45p income tax rate. It was not accompanied by a forecast from the Office for Budget Responsibility, nor did it contain any spending restraints to balance the books. The budget provoked a calamitous market reaction, with the pound hitting an all-time low against the US dollar, government borrowing costs surging and increased mortgage rates. Ms Truss was swiftly forced to abandon the 45p cut and sack Mr Kwarteng, replacing him with Jeremy Hunt, to try and calm the financial markets. She resigned two weeks later. Since coming to power last year, Labour has also been criticised for its financial decisions. Ms Reeves used June's spending review to set out a £300bn spree over the next five years, to be funded by higher taxes and more debt. She has handed a £190bn increase to public services, paid for by the tax raid on businesses which has been blamed for stalling economic growth. A further £113bn will be ploughed into infrastructure projects after the Chancellor tore up her fiscal rules to allow herself to borrow more for investment. Last month's borrowing figure came in at £20.7bn, the second-highest level on record behind June 2020, when the Treasury was funding furlough payments. As a result, Mrs Badenoch warns that Britain is entering a 'debt spiral'. She says the reversal on £5bn of cuts to sickness benefits has added 'more pressure to the public purse' and has fuelled fears of further growth killing tax rises. The UK now faces higher borrowing costs than once-bankrupt Greece and is spending more on debt interest repayments every year than the entire defence budget. Mrs Badenoch writes: 'Keir Starmer and Rachel Reeves have taken profligate spending to a different level. The UK economy is teetering on the brink. 'Bond markets are increasingly jittery about the levels of borrowing today with no balancing spending decreases. This is how countries enter a debt spiral. 'But it is not inevitable, it is a choice. A debt crisis would make everyone in the country a lot poorer and ruin people's lives. 'The Prime Minister must not let pride stop him doing what, I sincerely hope, he knows deep down is essential – cutting government spending.' Mrs Badenoch's comments also come against the backdrop of internal disagreement over whether the Tory party should continue to apologise for its time in office. She used her first speech as leader, delivered in December last year, to directly say sorry to voters for the Conservatives' failures on immigration. One of her closest allies, Baroness Maclean of Redditch, told a meeting in June that the party had 'done the apologies' and should now move on to setting out policies. But a few weeks later Alex Burghart, the shadow chancellor of the Duchy of Lancaster, told activists that the Tories should keep acknowledging their mistakes. Sir Mel Stride, the shadow chancellor, had led internal Tory criticism of the mini-budget, vowing last month that the party would 'never, ever' repeat it. Until now Mrs Badenoch had held her fire, though she did privately tell her shadow cabinet that it would be helpful if Ms Truss made fewer public interventions. Her warning comes after the International Monetary Fund and senior City figures sounded the alarm about Britain's spiralling debt. Ray Dalio, a billionaire US hedge fund investor, warned last week that the UK has entered a 'doom loop' of more borrowing, higher taxes and low growth. Ms Reeves has repeatedly refused to rule out returning with more tax rises in the autumn despite warnings that doing so would further damage the economy. The Chancellor is under growing pressure from Left-wing backbenchers to introduce a wealth tax, which would probably prompt a fresh exodus of entrepreneurs. Starmer and Reeves have not learnt the lessons of the mini-budget By Kemi BadenochPicture the scene: a new Prime Minister and Chancellor spending billions without also making the necessary savings to offset their splurge and balance the books. The markets react adversely, interest rates spike and the cost of living gets worse with prices soaring. For all their mocking of Liz Truss, Keir Starmer and Rachel Reeves have not learnt the lessons of the mini-budget and are making even bigger mistakes. They continue to borrow more and more, unable and unwilling to make the spending cuts needed to balance the books. They are egged on by a Left-wing Reform Party, chasing Labour votes with ever more outlandish promises of nationalisation and welfare giveaways. The Conservative Party is now under new leadership, and my abiding principle will be that the country must live within its means. Before you dismiss us as being part of the problem, (after all, the mini-budget happened on our watch), the difference is that in 2022 we recognised what had gone wrong and took action to fix it. Labour aren't doing this. In fact they're making a bad situation even worse. Since the pandemic, Britain has become more and more reliant on debt to pay for public services. We now spend almost twice as much on debt interest than we do on defence. And the deficit is over £70bn. Keir Starmer and Rachel Reeves have taken profligate spending to a different level. Labour politicians are used to entering office with a surplus built up by cost-cutting Conservatives. Their instincts are simply to spend more, and they were wholly unprepared for the post-Covid economic situation. We saw it when both Starmer and Farage refused to back my call to keep the two-child benefit cap, a policy that saves £3 billion a year. And we saw it again when the Prime Minister watered down his own Welfare Bill. Instead of making savings, it now actually increases welfare spending – adding more pressure to the public purse. Before that debate, I made a straightforward offer: Conservative MPs would give him the numbers in Parliament to get the Bill through, if the Prime Minister committed to cutting welfare costs, getting people into work, and ruling out further tax rises this autumn. He refused. So instead, we watched as the Government stripped its own legislation of any serious reform. The markets were also watching. The UK's borrowing costs are reaching levels not seen for 30 years – higher than even those in Greece. Incredibly, borrowing costs are higher now than after the mini-budget. That means prices rising and the long-running cost of living crisis continuing. The UK economy is teetering on the brink. There are now warnings, in the City and in Westminster, that a fiscal crisis may even be on the horizon. Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates, said this week that Britain had entered a 'doom loop' of rising debts, higher taxes and slower growth. Dalio's warnings came days after the International Monetary Fund said the government must take radical action to avoid a debt spiral. As we all saw in 2022, the Chancellor and the Prime Minister are reliant on the bond markets. Yet those bond markets are increasingly jittery about the levels of borrowing today with no balancing spending decreases. Rachel Reeves's unfunded series of U-turns have only added to the pressure. She is boxed in by her party on one side, and her fiscal rules on the other. Everyone now assumes tax rises are coming in the November Budget and the Government isn't denying it. The OBR is warning that higher tax is not good for growth. They are right. The Institute of Directors say that taxes and dire economic outlook is leading to the worst business confidence since the pandemic. Labour's mismanagement of our economy is having real consequences, and it's working people, savers and business owners who will pay more for declining public services. At the same time, rising welfare and poor incentives are pushing more people out of the workforce, making our problems even harder to fix. This is how countries enter a debt spiral. But it is not inevitable, it is a choice. A debt crisis would make everyone in the country a lot poorer and ruin people's lives. The Prime Minister must not let pride stop him doing what, I sincerely hope, he knows deep down is essential: cutting government spending. He should do so, for all our sakes. Kemi Badenoch is the Conservative Party leader Solve the daily Crossword
Yahoo
2 hours ago
- Yahoo
For US Companies, Europe Is Hard to Resist: Credit Weekly
(Bloomberg) -- Companies are increasingly looking to Europe to raise money cheaply, a shift that is turning out to be a near-term positive for US corporate debt. The World's Data Center Capital Has Residents Surrounded An Abandoned Art-Deco Landmark in Buffalo Awaits Revival We Should All Be Biking Along the Beach Seeking Relief From Heat and Smog, Cities Follow the Wind San Francisco in Talks With Vanderbilt for Downtown Campus Verizon Communications Inc. this week sold €2 billion ($2.31 billion) of debt, its first deal in the European market since early 2024. Earlier in July, FedEx Corp. and PepsiCo Inc. both sold debt in the common currency, their first offerings there since 2021. US companies have sold €116.3 billion ($134 billion) of debt in Europe this year, known as reverse yankee issuance, just €4.4 billion shy of an annual record with about five months left in the year. Some corporations, like FedEx and PepsiCo, are just refinancing euro debt that's maturing, but the aggregate figure is higher with good reason: the European Central Bank is in active rate cutting mode amid muted inflation pressures, while the US hasn't cut rates since December. 'From an issuer's point of view, it's less expensive to borrow in euros,' said Gordon Shannon, a portfolio manager at TwentyFour Asset Management. The outlook for US rates in the coming months is getting hazier. A report on Friday said job growth slowed sharply over the past three months and the unemployment rate rose, signaling the labor market is shifting into a lower gear and giving the Federal Reserve more leeway to cut rates. US Treasury yields dropped, but to levels seen in early July. Even with Friday's market moves, borrowing in Europe remains cheaper. For borrowers that hedge, that dynamic may change in the coming days. Even so, over time the shift is probably toward more company bond sales in Europe, according to Hans Mikkelsen, US credit strategist at Toronto-Dominion Bank's TD Securities. As the US continues to impose more tariffs on other countries, including fresh levies announced on Thursday, foreign investors may have a 'natural tendency' to buy less US corporate bonds in favor of Euro-denominated corporate debt, Mikkelsen said in an interview. That decrease in demand will lead companies to seek out investors where they are. 'It's a bit of a long-term structural development where you'll see more US companies ease into those other markets,' Mikkelsen said in an interview. 'There will be less demand for US corporate bonds and more demand for non-US corporate bonds. US companies will have the same issuance needs. So they have to realize that they have to fund themselves more in other currencies.' In addition to US companies looking to borrow in euros, European companies are increasingly shying away from borrowing in dollars. In July, reverse yankee issuance was about $9 billion, compared with $3 billion on average for the month over the prior three years, according to Mikkelsen. European companies, on the other hand, borrowed a little more than $2 billion in dollars in July, compared with $13 billion a month on average for the prior three years. Those shifts toward European issuance go a long way toward explaining why US dollar bond sales fell short of Wall Street dealers' forecasts last month, Mikkelsen wrote. Dealers had forecast sales of around $100 billion for July, while actual sales were closer to about $81 billion, according to data compiled by Bloomberg News. In the near term, anything that reduces selling volume, known as a technical factor, could help keep spreads on US high-grade corporate bonds relatively tight. At the same time, demand, also a technical factor, remains strong globally, with cash gushing into credit funds. US company debt faces a series of pressures now, but valuations for much of the past week were at their strongest level of the year, with spreads at just 0.76 percentage point as of Thursday's close. 'If you take this overarching trend of net supply being down, banks issuing less because of regulatory reform expectations as was the case this past quarter and more US companies are issuing in Europe, all that does is further reinforce the positive technicals in the US market,' according to John Servidea, global co-head of investment-grade finance at JPMorgan Chase & Co. Week In Review US leveraged-loan issuance reached a fresh record in July, as junk-rated borrowers flocked to the market largely to reprice debt, saving companies millions in interest expenses. Deutsche Bank has seen its league table rankings drop in leveraged finance, to no. 8 from no. 1 in 2014. The bank has gotten tangled up in a series of difficult deals, and has faced internal and regulatory pressure to shrink the business, according to people familiar with the matter. Centerbridge Partners joined the ranks of many alternatives managers that see accessing 401(k) retirement funds as a logical next step for private credit firms. But while many are welcoming a future where 401(k) retirement vehicles have access to private investments, Sixth Street Partners' Co-Chief Investment Officer Josh Easterly is urging caution. Chinese developer Fantasia Holdings Group Co. plans to release a new restructuring plan in the coming weeks after previous attempts fizzled, underscoring the years-long struggle of builders to move past an unprecedented property crisis. In the US investment-grade bond market, Lazard Inc. sold $300 million of notes to refinance debt maturing in 2027, while Sherwin-Williams Co. sold $1.5 billion in three tranches. In Europe, UK utility Southern Water Ltd. sold the biggest sterling corporate bond in nearly 18 months as it seeks to shore up its finances, while General Motors Financial Co Inc. and Severn Trent sold impromptu euro debt offerings. Harley-Davidson Inc. said it plans to sell a nearly 10% stake in its finance unit along with more than $5 billion of retail loans to KKR & Co. and Pacific Investment Management Co. Bloomberg had previously reported that the firms were in advanced talks. Wall Street has a familiar gripe about the bots that now handle a growing share of trading in the corporate bond market: they are there to buy and sell your bonds, right up until you really need them. In periods of severe market stress, these computer-driven programs have historically struggled to keep up, forcing traders to turn them off. But in April, the algos showed signs of learning to stay online even when volatility spikes. A UK carpet firm that once supplied the British royal family has been scrambling for months to manage its looming debt maturities. It found a solution in an unlikely place: US distressed debt funds. EchoStar Corp., the broadband company that's missed debt payments, is being pushed by federal regulators to sell some of its airwaves to address concerns it has failed to put valuable slices of wireless spectrum to use. Legal software provider Dye & Durham Ltd. launched a review of strategic options, including a potential sale, in a bid to maximize shareholder value after reaching a truce with one of its largest investors. On the Move Oliver Thym, a partner at Thoma Bravo, is leaving the firm after more than five years as its most senior credit executive. Thym, who oversaw Thoma Bravo's credit funds and strategic debt investments, will transition out of his role by the end of this year as the firm adds Jeff Levin and Kunal Soni who previously worked at Morgan Stanley. Oaktree Capital Management hired two executives from Bain Capital and Intermediate Capital Group as it builds out its Europe direct lending business. Alessandro Nuti, who worked at Bain for over seven years, is joining as a managing director, while Kieran Thind is joining from Intermediate Capital as a senior vice president. CoBank recruited Aimee Evans as syndicate head of sales, capital markets. Evans previously worked at BMO Capital Markets as a managing director, and spent about a decade at Bank of the West before it was acquired by BMO. Sumitomo Mitsui Banking Corp.'s head of loan origination for East Asia, Hong Kong-based Wami Ha, is retiring after more than 30 years working in the banking sector. Separately, SMBC appointed former Morgan Stanley managing director Joy Kwek as head of capital markets and solutions for Asia Pacific — a newly created role based in Singapore. --With assistance from Tasos Vossos. How Podcast-Obsessed Tech Investors Made a New Media Industry Everyone Loves to Hate Wind Power. Scotland Found a Way to Make It Pay Off Russia Builds a New Web Around Kremlin's Handpicked Super App Cage-Free Eggs Are Booming in the US, Despite Cost and Trump's Efforts What's Really Behind Those Rosy GDP Numbers? ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
