S&P confirms Gruma

Standard & Poor's said it removed the BBB- long-term corporate credit rating on Gruma SAB de CV from CreditWatch, where it was placed with negative implications on Feb. 1 and affirmed the BBB- rating on its $300 million perpetual bond.

The outlook is negative.

S&P said the action follows the company's announcement of its proposed $200 million equity offering.

The agency said it affirmed ratings because the planned equity offering will be used to reduce its debt levels. The combination of Gruma's price increases, announced late in 2007, and debt reduction of at least $150 million in the second quarter could improve the total debt-to-EBITDA ratio to 2 times, S&P said.

Ratings reflect the company's U.S. operations' stable performance, the geographic diversification of its cash flow and the company's strong market share position, the agency said.

These factors are mitigated by the challenges from corn and wheat price volatility, risk from Gruma's debt-financed capital expenditures strategy, and the risks related to its Venezuelan operations, S&P said.

The company's total debt-to-EBITDA ratio rose to 2.6 times.

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