Moody’s could lower Potash

Moody's Investors Service said it placed the A3 senior unsecured ratings of Potash Corp. of Saskatchewan Inc. under review for downgrade following the announcement that it plans to merge with Agrium Inc. (Baa2 under positive review) in a stock for stock transaction.

The agency also affirmed Potash's commercial paper rating at Prime-2.

The transaction was approved the boards of both companies and is subject to customary closing conditions, including receipt of regulatory approvals, Canadian court approval, and approval by the shareholders of both companies.

The companies expect the transaction to be completed in mid-2017.

"While the combination of Agrium and Potash will create a preeminent fertilizer company, management has not laid out their near-term financial priorities for cash and their longer term targets for credit metrics over the cycle," Moody’s senior vice president John Rogers said in a news release.

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