S&P assigns BBB rating to BRF Brasil Foods' planned senior unsecured notes due 2022
June 1, 2012
– Standard & Poor's Ratings Services said today that it assigned its 'BBB-' rating on BRF Brasil Foods S.A.'s planned senior unsecured notes due 2022. Its wholly owned subsidiary Sadia S.A. (BBB-/Stable/--) will guarantee irrevocably and unconditionally the notes. A clause in the prospectus states that once BRF entirely incorporates Sadia, the notes won't have any
guarantor. The rating reflects the credit quality of BRF's consolidated figures and the new notes' lack of structural subordination to other debt. Our ratings on BRF reflect its satisfactory business profile, intermediate financial profile, and adequate liquidity.
The notes issuance is part of BRF's liability management to improve its capital structure, through the extension of short-term maturities, reduction of refinancing needs, and lowering of interest rates. BRF's cash position of R$2.1 billion, backed by an undrawn revolving credit facility of $500 million and expected cash generation to exceed R$2.5 billion, compares favorably with short-term maturities of R$3.8 billion (including derivatives), part of which has been rolled over consistently. The stronger cash and lower short-term maturities will also work as a cushion against increasing volatility of natura export sales, which account for about 30% of BRF's sales.
RELATED CRITERIA AND RESEARCH
-- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
-- 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008