Fitch rates BRF notes BBB

Fitch Ratings said it assigned an expected BBB rating to the proposed benchmark-sized senior unsecured notes to be issued by BRF GmbH.

The notes will be unconditionally and irrevocably guaranteed by BRF SA, Fitch said.

These senior unsecured notes will rank equally with all of BRF's existing and future senior and unsecured indebtedness, the agency said.

The proceeds will be used to refinance existing notes, Fitch said.

BRF is one of Brazil's largest food companies and one of the largest poultry exporter worldwide, the agency said.

The company's cash flow benefits from strong domestic brands that have given the company market shares that range between 50% and 60% in many market segments, Fitch said.

While entry barriers to the processed food segment are relatively low, BRF benefits from its extensive product offering, strong brand recognition, recurring innovation and extensive distribution capacity for refrigerated products in Brazil, the agency said.

Fitch said it expects a contraction of BRF's EBITDA margin in 2016 due to the increase of raw material cost and the subdued economic environment in Brazil.

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