Moody’s gives Archer Daniels notes A2

Moody's Investors Service said it assigned an A2 rating to Archer-Daniels-Midland Co.'s issuance of $1 billion of senior unsecured notes due 2026.

The notes will be used to repay commercial paper; however, the agency said it also views this as a way to prefund some upcoming debt maturities and take advantage of low rates.

The outlook is stable.

Moody’s said the A2 rating reflects Archer Daniels’ leading global positions in many agricultural commodities, a relatively conservative balance sheet (as measured by balance sheet debt-to-net working capital), substantial geographic diversity, as well as the projected growth in demand for agricultural commodities, especially in developing countries.

The ratings are tempered by the company’s strategic growth initiatives, which will likely require additional acquisitions and elevated capital spending (on its own or through joint ventures), the agency said.

Moody’s added that the increase in the number of large merchandising firms globally is leading to lower margins across the industry, especially given the low and stable commodity prices.

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