Moody's downgrades Independencia

Moody's Investors Service said it lowered Independencia SA's corporate family rating to B3 from B2 and Independencia International Ltd.'s $225 million 9 7/8% senior unsecured guaranteed notes due 2017 and $300 million 9 7/8% senior unsecured guaranteed notes due 2015 to B3 from B2.

The ratings were placed under review for further possible downgrade.

These rating actions follow Independencia's announcement of the termination of the consent solicitation and tender offer for its unsecured notes. The agency said this failure to reduce debt denominated in appreciated dollars will likely keep the company's leverage above the 6 times downgrade threshold for its prior B2 rating. The debt-to-EBITDA ratio for the 12 months ended in September was 6.9 times.

Like other Brazilian beef processors, Independencia's profit margins and cash flow have been challenged by industry overcapacity in relation to the size of the Brazilian cattle herd, Moody's said, as well as by 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.

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