Fitch Assigns 'BB' to Fibria Notes

CHICAGO--(Business Wire)--
Fitch Ratings has assigned a 'BB' rating to the proposed 2020 notes to be issued
by Fibria Overseas Finance Ltd., a wholly owned subsidiary of Fibria Celulose
S.A. Proceeds from these unsecured guaranteed notes, which are expected to total
more than USD500 million, will be used to repay existing debt. Fibria's Issuer
Default Rating (IDR) and debt ratings are as follows:

--Local currency IDR 'BB';

--Foreign currency IDR 'BB';

--National scale rating 'A+ (bra)'.

The Rating Outlook for Fibria is Stable.

These ratings reflect the excellent business position of Fibria, the favorable
dynamics for bleached eucalyptus kraft market pulp (BEKP), the company's
ownership of more than 1.0 million hectares of land in Brazil and the strong
financial position of its shareholders. They also take into consideration the
volatility of the pulp market and the company's high leverage.

Excellent Business Profile; Sustainable Competitive Advantage:

Fibria is the world's leading producer of market pulp with 5.4 million tons of
BEKP capacity, nearly double the size of the second largest producer in the
industry. The company has a global market share of approximately 11% within
market pulp, and 32% within the fastest growth segment of the market, BEKP.
Fibria owns approximately 1.0 million hectares of land in Brazil, upon which it
developed nearly 600,000 hectares of eucalyptus plantations. The nearly ideal
conditions for growing trees in Brazil make these plantations extremely
efficient by global standards and give the company a sustainable advantage in
terms of cost of fiber, and transportation costs between forest and mills.

The company augments its advantage in fiber cost with large, modern pulp mills.
As a result of its efficient mills and low cost pulp wood, Fibria is one of the
lowest cost producers of pulp in the world. The company uses its size and cost
position to remain a price leader within the industry. Fibria's position is
viewed to be sustainable through the medium to long term due to large
investments in forestry during the past five years by its predecessor companies,
VCP and Aracruz. These investments are likely to result in the construction of
more than 5 million tons of addition pulp capacity by Fibria during the next 10
to 15 years.

Short-Term Debt High But Manageable:

Fibria had BRL3.9 billion of cash and marketable securities and BRL 14.7 billion
of debt as of Dec. 31, 2009. Although short-term debt was relatively high at
year-end at BRL3.9 billion, liquidity is manageable. Seller financing, due to
three members of Aracruz's former shareholder group (Arapar, Sao Teofilo and
Arainvest), accounted for BRL 2.4 billion of short-term debt. Fibria repaid more
than BRL1.0 billion of this financing during January. During March 2010, the
company entered a USD535 million export prepayment agreement in order to extend
the average life of the company's maturity schedule. Proceeds were used to repay
two export facilities.

The company's dollar-denominated debt as of Dec. 31, 2009 was primarily
comprised of an USD1 billion bond due 2019, USD511 million of secured debt
related to derivative losses and USD2.1 billion of export prepayment debt that
matures between 2010 and 2018. Fibria's Brazilian real-denominated debt consists
mainly of BRL3.7 billion of seller financing due during 2010 and 2011 and BRL1.8
billion of debt with Brazil's development bank, BNDES. The BNDES debt is secured
with liens on property, plant and equipment. Fibria intends to use the proceeds
from the 2020 notes to repay the derivative debt, thereby eliminating the
restrictive covenants and liens attached to that debt.

Should market conditions suddenly worsen, Fitch believes that Fibria could
extend its payment schedule with the families associated with Arapar, Sao
Teofilo and Arainvest if needed. It is also likely that BNDESPar, a subsidiary
of Brazil's development bank BNDES, would provide additional equity support for
Fibria if needed. BNDESPar (33.6% as of Dec. 31, 2009) controls Fibria along
with Votorantim Industrial S.A. (29.3%) through a shareholders agreement.

Leverage Expected to Decline in 2010:

During 2009, Fibria generated BRL 1.5 billion of EBITDA, as calculated by Fitch,
and BRL 1.1 billion of funds from operations (FFO). These figures are low for
the company's capacity and reflect extremely low pulp prices during the first
half of the year. They resulted in Fibria having a net debt to EBITDA ratio of
7.3 times (x) and an FFO adjusted leverage ratio of 7.7x.

Pulp prices have moved sharply upward during 2010 due to strong demand from
China and a recovery of demand in Europe, low inventory levels, and disruptions
caused by the earthquake in Chile and the port strike in Finland. Fibria will
also benefit from synergies obtained from the merger of Aracruz and VCP, as well
as a full years output from the Tres Lagoas pulp mill. As a result of the
aforementioned factors, Fibria's EBITDA is expected to nearly double. The
company has announced BRL 1.2 billion of capital expenditures, as it continues
to invest in forests with a goal of building a new pulp mill in the near future.
Consequently, net debt will likely not decline by more than BRL1.0 billion
during 2010. This would lead to a net debt/EBITDA ratio for 2010 of about 3.3x.

Potential Rating or Outlook Drivers:

Any factor that leads to a material reduction of debt could lead to a positive
rating action. Potential sources of lower debt include stronger than anticipated
pulp prices or the sale of the company's paper assets. A negative rating action
is unlikely during 2010. A class action lawsuit has been filed against the
company and some of its current and former directors and officers. A material
ruling against Fibria could lead to negative rating actions during 2010.

Applicable criteria available on Fitch's website at www.fitchratings.com:

--'Corporate Rating Methodology' dated Nov. 24, 2009;

--'National Ratings- Methodology Update' dated Dec. 18, 2006.

Additional information is available at www.fitchratings.com.

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Fitch Ratings
Joe Bormann CFA, +1-312-368-3349 (Chicago)
Fernanda Rezende, +55-11-4504-2618 (Rio de Janeiro)
Media Relations
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com

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