Moody's turns Upfield view to negative

Moody's Investors Service said it changed the outlook for Sigma Holdco BV (Upfield), the parent company of Upfield BV, to negative from stable.

"The negative outlook reflects the company's weaker than expected operating performance in 2021 and the challenge posed by the spike in commodity prices, which might limit any significant improvement in profitability over the next six to 12 months, delaying any recovery in credit metrics," said Paolo Leschiutta, a Moody's senior vice president and lead analyst for Sigma Holdco BV, in a press release.

"We recognize that the company has successfully reduced its restructuring costs and improved its cash flow generation in 2021. However, leverage is very high for the rating at around 12.8x on a Moody's adjusted basis as of September and failure to pass on price increases to customers and to improve profitability could lead to further downward pressure on the rating over the next 12 to 18 months," added Leschiutta.

Concurrently, the agency affirmed the company's B2 corporate family rating, B2 probability of default rating, B2 backed senior secured ratings on the first-lien term loan facility and on the revolving credit facility borrowed by Upfield BV, and the Caa1 backed senior unsecured ratings on the €685 million and the $525 million equivalent backed senior unsecured notes issued by Sigma Holdco.

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