Moody's rates Tereos bonds Ba3

Moody's Investors Service said it assigned a provisional Ba3 (LGD4) long-term rating to the proposed senior bonds due 2020 to be issued by Tereos Finance Groupe I. The issuer is a special-purpose vehicle owned by Tereos UCA, the holding company of Tereos. The outlook is stable.

The agency expects the proceeds to be used to prefund the maturity of the company's €500 million of senior secured notes due April 2014.

The Ba3 rating is one notch below the group's Ba2 corporate family rating, which reflects that the bonds are subordinated to the group's substantial senior secured bank facilities, the agency said.

The Ba2 corporate family rating reflects the firm's significant and growing exposure to commodity price volatility, high capital expenditures, currently tight covenant headroom at the Tereos EU level and uncertainties surrounding the regulatory environment for sugar producers in the European Union over the medium- to long-term horizon, Moody's said.

More positively, the agency said the rating also reflects Tereos' market position as the third largest sugar producer in Europe; its pre-eminent position in the French beet sugar industry; its diversification by geography, product and end use; and its stable sources of raw materials.

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