Moody's: Independencia outlook negative

Moody's Investors Service said it changed Independencia SA's outlook to negative from stable and affirmed its local-currency corporate family rating at B2 and its $225 million 9 7/8% senior unsecured guaranteed notes due 2017 and $300 million 9 7/8% senior unsecured guaranteed notes due 2015 at B2.

The agency said the negative outlook reflects its expectation that the company's total debt-to-EBITDA ratio and net debt-to-EBITDA ratio will likely remain above 5 times and 4 times, respectively, and challenges facing the Brazilian industry in terms of beef processing overcapacity, combined with a weaker outlook for fresh beef and leather export prices and volumes due to the adverse global economic environment and the low availability and high cost of trade finance credit for importers.

The company recently announced a tender offer to purchase up to 27.5% of its 2015 and 2017 bonds at a 34% discount to par for holders who tender by Feb. 3 and at a 37% discount to par for those who tender by Feb. 18. Moody's said it considers this an opportunistic tender offer and not a distressed exchange in the interest of default avoidance because the agency believes Independencia's motivation for the offer is to reduce dollar-denominated debt and consequently its foreign exchange exposure.

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