|
NEW YORK, June 8, 2006 /PRNewswire
Over the past year, ethanol industry fundamentals have improved dramatically, but it is uncertain whether this progress can be sustained, according to a report published today by Standard & Poor's Ratings Services titled "Ethanol Is Hot, But That Doesn't Ensure Stronger Ratings For U.S. Producers." "Against this backdrop, we continue to analyze the credit quality of ethanol producers with our conservative assumptions and to continue to highlight fundamental risks that face industry players," said Standard & Poor's credit analyst Elif Acar. The profitable ethanol market has resulted in rising capital costs and longer time to market -- factors that can in some cases more than offset the benefits of higher ethanol prices or new production facilities. "As a result, we conclude that most projects and companies in the ethanol industry seeking ratings for long-term financing would continue to fall into the highly speculative-grade 'B' category," Acar said. However, projects that have a low level of debt leverage compared with peers, adequate liquidity, and existing capacity that is poised to take advantage of the current high-ethanol/low-corn-price environment with locked-in margins providing some cash flow certainty, may achieve higher ratings if the debt structure allows for meaningful debt repayment during such stronger periods. Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With more than 6,300 employees located in 21 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com . SOURCE Standard & Poor's News Provided By |
