Moody's rates JBS notes B1

Moody's Investors Service said it assigned a B1 foreign currency rating to JBS SA's proposed issuance of approximately $200 million of senior unsecured notes due 2016 and affirmed JBS - Friboi's B1 global local currency corporate family rating and B1 $275 million senior unsecured notes due 2011.

The outlook is stable.

About 70% of the net proceeds of the new notes will be used to refinance existing short-term debt while the remaining proceeds will be used for capital expenditure and general corporate purposes.

JBS - Friboi's B1 corporate family rating continues to reflect the risks posed by animal disease issues, the pricing volatility inherent in a commodity business and the current negative free cash flow generation due to the company's growth strategy. However, the agency said it expects positive cash flow next year.

At the same time, the B1 rating continues to be supported by JBS - Friboi's market position as the largest Brazilian beef exporter and fourth-largest beef processor in the world in terms of slaughter capacity, its competitive cost-structure, and the fact that roughly 48.6% of revenues are from exports to geographically diverse regions, Moody's added.

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