Moody's lowers International Flavors

Moody's Investors Service said it downgraded the issuer rating of International Flavors & Fragrances Inc. to Baa1 from A3 and affirmed its commercial paper at Prime-2.

This concludes the review begun on July 26, and the outlook is stable.

The agency said the downgrade is due to the shift in the company's financial policy toward maintaining higher leverage. The company will issue debt to finance its $450 million accelerated share repurchase program, which is part of a share repurchase program authorized by the board of directors in July that will total $750 million.

International Flavors' Baa1 rating is supported by its significant scale in the specialty chemicals business, strong global market shares, long-established customer relationships, operational diversity, anticipated growth opportunities in the developing markets, research and development productivity and a historically conservative financial policy, Moody's said.

The ratings are tempered by high competition; the company's dependence on the success of brands managed by its clients, which International Flavors does not have control of; on-going popcorn flavoring litigation; and significant off balances sheet obligations, the agency said.

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