MC Brazil Downstream Trading notes rated BB- as refinancing supports leverage profile

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MC Brazil Downstream refinancing

Highlights

Fitch assigns proposed benchmark-size senior secured notes a 'BB-' rating, with REFMAT as guarantor, targeting debt refinancing and maintaining leverage profile.
Refining margins rise to USD11.6 per barrel in 2025 and USD17.4 in 1H26 as production costs fall to USD7.1 in 2025, supporting lower EBITDA leverage of 3.7x in 2025.
Despite a single-asset profile and limited integration, REFMAT's 302,000 barrel-per-day refinery benefits from import parity pricing, supplier diversification, and port access.

Proposed financing structure and rating rationale

As reported by Fitch Ratings, the proposed benchmark-size senior secured notes have been assigned a 'BB-' rating, with REFMAT acting as guarantor and proceeds earmarked for debt refinancing and general corporate purposes.

The new bond and term loan structure is designed to replace the existing bond and remain aligned with REFMAT's 'BB-' rating. The package includes a first-lien pledge over all shares of REFMAT and MC Brazil Trading S.a.r.l., as well as receivables collection accounts, while the term loan adds maintenance covenants intended to support deleveraging.

Fitch says the term loan's sculpted legal amortization schedule, along with additional amortizations tied to performance, should help reduce debt over the rating horizon. The agency also expects these features to keep leverage in line with the company's current credit profile.

Refining margins and operating profile shape outlook

EBITDA generation remains the main support for the rating, helped by wider refining margins, a better product mix, higher utilization and a lower cost base. Fitch says spreads rise to USD11.6 per barrel in 2025 and USD17.4 per barrel in the first half of 2026, while utilization reaches 86.6% in 2025 and 81.8% in 1H26.

Production costs also decline from USD12 per barrel historically to USD7.1 per barrel in 2025, before reaching USD9.4 per barrel in 1H26, mainly because of lower electricity and logistics expenses. Fitch says these trends reduce EBITDA leverage to 3.7x in 2025 and support its expectation that leverage remains well below the 3.5x sensitivity for the 'b' category, with debt-reduction mechanisms potentially pushing leverage below 2.0x over the rating horizon.

The rating is still constrained by REFMAT's single-asset profile, limited integration and relatively modest asset complexity against global peers. Fitch says the refinery's 302,000 barrel-per-day capacity, location in Brazil's Northeast and access to import parity pricing partly offset those risks, while supplier diversification and maritime port assets help mitigate crude concentration and logistics exposure.

Our earlier article on Genting Bhd’s RM1.25 billion rights issue explained how the group planned to channel most proceeds into debt repayment, while also setting aside funds for financing and transaction costs to ease interest pressure. We also noted the steep share-price decline after the fundraising announcement, alongside management’s share purchases and the market’s focus on dilution and balance-sheet strengthening.

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