Moody's ups Land O'Lakes

Moody's Investors Service said it upgraded Land O'Lakes, Inc.'s corporate family rating and probability-of-default rating to Ba2 from Ba3 and affirmed its speculative grade liquidity rating of SGL-2.

The agency also upgraded the issuer's $225 million senior secured revolving credit to Baa3 (LGD2, 18%) from Ba1, $175 million 9% senior secured second-lien debt to Ba1 (LGD2, 29%) from Ba2 and senior unsecured notes to Ba2 (LGD4, 57%) from Ba3.

The outlook is stable.

Moody's said the ratings reflect several factors such as portfolio streamlining, management commitment to cutting debt and improved financial flexibility, credit metrics and operating results. The company also benefits from the Land O' Lakes brand, the cooperative's scale, strong market positions and broad distribution.

The ratings also consider the cooperative's exposure to volatile agriculture and commodity markets and inconsistent business profile, Moody's said. Other concerns are the organizational complexity, challenges of adapting to a cooperative ownership structure and historically high cash payments to cooperative members.

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