Moody's raises CF unsecured notes

Moody's Investors Service said it upgraded the senior unsecured rating of CF Industries, Inc. to Ba1 from Ba2 but downgraded the rating on the 2026 senior secured notes, which now rank with its senior unsecured, to Ba1 from Baa2 because the notes no longer benefit from a collateral package because of a security fall away provision in the indenture.

The agency also affirmed the Ba1 corporate family rating and the Ba1-PD probability of default rating of CF Industries Holdings, Inc. and changed the ratings outlook to positive from stable, citing completed and anticipated debt reduction after management set a $3 billion balance sheet debt target, which will support credit metrics in trough nitrogen pricing conditions. The speculative grade liquidity rating is unchanged at SGL-1

"The revision of the rating outlook reflects debt reduction and metrics improvement. CF paid off $500 million of debt this year, bringing balance sheet debt to $3.5 billion, and management also committed to paying off the remaining $500 million of 2023 notes on or before their maturity. Pro forma for the latest debt reduction, adjusted debt/EBITDA was approximately 2.3x in the 12 months ended June 30, 2020. Leverage is expected to decline below 2x in 2021 amid strong demand and pricing in the nitrogen fertilizer market,” the agency said in a press release.

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