Moody’s upgrades JBS

Moody’s Investors Service said it upgraded JBS SA corporate family rating to Ba2 from Ba3 and the senior unsecured ratings of its wholly owned subsidiaries JBS USA Lux SA and JBS Investments II GmbH to Ba2 from Ba3. The rating of the secured term loan under JBS USA Lux was upgraded to Ba1 from Ba2. The outlook is stable.

“The upgrade of JBS’ ratings to Ba2 is supported by the reduction in financial leverage and liquidity risk as a consequence of stronger operating performance and successful liability management initiatives between September 2018 and September 2019 that resulted in the extension of debt maturities and reduced funding costs,” said Moody’s in a press release.

JBS also repaid the normalization agreement, established in May 2018 for a total amount of R$12.2 billion, and originally due in 2021. The full repayment of the normalization agreement released about R$7.8 billion in collateral.

“JBS’ Ba2 ratings are supported by the strength of its global operations as the world’s largest protein producer and its substantial diversification across protein segments, geographies and markets. JBS’ strategy to expand its global footprint into value-added processed food segments has improved its business profile and will lead to more stable and stronger operating margin and cash flow over time. JBS’ robust liquidity position also supports the ratings. The company has a cash balance of $1.9 billion at the end of September 2019, plus $1.9 billion available under committed credit facilities, and no significant debt maturities until at least 2023,” said Moody’s.

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