S&P upgrades Gruma

Standard & Poor's said it raised the ratings on Gruma SAB de CV, including raising the corporate credit rating to BB from BB-.

The recovery rating on Gruma's $300 million fixed-rate perpetual notes, indicating 50% to 70% expected recovery in a default, remains unchanged at 3.

The outlook is stable.

The upgrade follows Gruma's ongoing commitment to a more prudent financial strategy, which has resulted in total debt-to-EBITDA of less than 3x and operating results in line with expectations, despite higher raw material costs in 2011, S&P said.

Gruma has been able to mitigate high corn price volatility through anticipated purchases, corn-hedging strategies and price increases across most of its subsidiaries, the agency said.

Additionally, the company was able to fund its acquisitive expansion strategy and significant working capital requirements mainly with internal cash flow generation, S&P said.

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