S&P rates Marfrig notes B+

Standard & Poor's said it assigned a B+ rating to Marfrig Holdings Europe BV's planned $300 million senior unsecured notes due 2017.

The rating reflects the credit quality of both Marfrig Alimentos SA, which will irrevocably and unconditionally guarantee the bonds, the agency said, along with its most relevant operating subsidiaries.

The proposed bond issuance, together with the company's recent equity offering through which Marfrig raised about R$1 billion, will improve its capital structure by reducing overall debt and extending its maturities, lowering the company's annual refinancing risks and sizable interest rate burden, S&P said.

The agency said it expects Marfrig to continue this deleveraging trend and use most of the proceeds of both transactions to pay down debt as it comes due.

S&P also said it expects operating performance to improve thanks to both strong cash flows from its beef division and a gradual recovery in its poultry unit, as grain prices have softened.

However, the outlook remains negative as Marfrig confronts the volatility of the beef and poultry industry and the need to improve operating efficiencies to generate stronger discretionary cash flows, the agency said.

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