Moody's downgrade Cargill debt ratings

Related tags Mergers and acquisitions Finance

Moody's Investor Services yesterday downgraded Cargill's debt
ratings, citing factors including the uncertainty surrounding
Cargill's strategy with regard to future acquisitions and increased
capital expenditure.

Moody's cut the senior unsecured long term ratings for the company and its guaranteed subsidies from A1 to A2.

Cargill​ portays itself as "an international provider of food, agricultural and risk management products and services"​ and has 101,000 employees in 60 countries. It is perhaps best known to nutraceutical companies for its soy protein business and as the owner of Cerestar, a global maker of sweetener and starch products.

Peter Adbill, senior credit officer at Moody's, explained that the downgrade was not at all related to Cargill's food industry, but linked rather to the lack of clarity as to what it will acquire next.

In particular, he expressed surprise at the company's merger with the highly leveraged fertilizer production operations of IMC Global as part its 10-year transformation strategy to become the premier provider of solutions to food and agricultural customers.

"Cargill's first acquisition has been a highly leveraged agrifirm, which has created uncertainty about its strategy,"​ he said. "Its increased acquisition strategy also means its financial meters are not looking like they should for a A1 company."

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