Moody’s has placed Celulosa Arauco’s Baa2 rating and CMPC’s Baa2 ratings on review for downgrade, it says, as debt levels will challenge the two Chilean pulp producers. Arauco’s review was prompted by the recent deterioration in company's performance, specifically an increase in leverage to levels inconsistent with its rating. Its debt has increased by $1.3bn in the past 12 months. “At the same time, the company's EBITDA deteriorated, largely due to significant deterioration in pulp prices over the past 12 months. We believe that in the near term pulp prices will remain low, due to additional pulp capacity coming online in Latin America in 2013-2014, the agency says. CMPC has also being examined to weaker credit metrics. The planned expansion of its Guaiba II project in Brazil requires expenditures of $2.1bn, and will pressure liquidity and drive CMPC’s leverage up from current 4.0x levels.