Ethanol, as anyone who pays attention to automotive news should know, has been a booming business recently. While the fundamentals that support the industry have improved dramatically in the past year, the sustainability of the ethanol
industry's continued progress is unknown. This is according to a report
published this week by Standard & Poor's Ratings Services titled "Ethanol Is Hot, But That Doesn't Ensure Stronger Ratings For U.S. Producers."
The political support for ethanol (51 cents a gallon tax credit, the requirement to replace MTBE like pronto) and the increasing gasoline prices are promoting ethanol, but these factors cannot last. Standard & Poor's therefore gives "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."
[Source: Standard & Poor's]