Moody’s turns Sycamore view to negative

Moody’s Investors Service said it changed its outlook for Sycamore Buyer LLC to negative from stable and affirmed its ratings, including the Ba3 ratings on the company’s first-lien revolver and term loans.

“The outlook revision to negative from stable reflects Moody's view that the recent downtown in the poultry cycle is driving a significant decline in EBITDA that will likely lead to weaker credit metrics for Sycamore than Moody's had forecasted for the Ba3 rating,” the agency said in a press release.

Moody's said it sees Sycamore's debt/EBTIDA climbing to the 3x range by the end of calendar 2023 from 1.5x as of the 12 months ended Dec. 31.

“The current downturn in the poultry cycle can be attributed to a few factors. First, elevated corn and soybean meal prices during the past year are a significant headwind for the industry, as corn and soybean meal represent approximately 50%-60% of the cost of growing a chicken. Second, the industry is experiencing a period of depressed chicken pricing due to an oversupply of poultry. During the second half of calendar 2022, poultry processors increased their poultry production in anticipation of higher consumer demand for chicken relative to other proteins, which did not occur,” Moody’s said.

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