Fitch rates Marfrig notes BB-

Fitch Ratings said it assigned an expected BB- rating to Marfrig Global Foods SA's proposed $750 million issuance of global notes.

The proposed senior unsecured global notes will mature in 2024.

The notes will be issued through its wholly owned subsidiary, MARB BondCo plc and will be unconditionally and irrevocably guaranteed by Marfrig, Marfrig Holdings (Europe) BV and Marfrig Overseas.

The proceeds will be used to refinance the notes due in 2018 and 2020, Fitch said, and for general corporate purposes.

The agency said it expects Marfrig's free cash flow to be about R$100 million in 2017, compared to the reported R$44 million in 2016.

Factors driving the improvement will be lower overall interest expenses due to refinancing, interest savings from the mandatory debt conversion to equity and improved performance of the Keystone division, Fitch said.

The ratings continue to incorporate the company’s broad product and geographic diversification, which helps reduce risks related to disease, trade restrictions and currency fluctuation, the agency said.

The rising Brazilian real against the U.S. dollar, weak consumer environment in Brazil and high cost of cattle in that market made 2016 challenging for companies in the Brazilian protein sector, Fitch explained.

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