Moody's downgrades K+S

Moody's Investors Service said it downgraded K+S AG's senior notes due 2014 and 2022 to Ba1 from Baa2 and assigned a Ba1 corporate family rating and Ba1-PD probability of default rating to the company. This concludes the review for downgrade that began Aug. 7, and the outlook is stable.

The agency said the downgrade reflects the company' decision to proceed with investment in its large-scale greenfield potash mine, Legacy, in Saskatchewan at the time when the global potash market faces significant price uncertainty. In Moody's view, K+S will likely need to raise additional debt to fund this project, as a result of which the company's financial profile will be subject to sustained material deterioration.

However, the agency anticipates that K+S will act to maximize utilization rates at its mines, will continue to operate all of them at the $350 per tonne price level and will take measures to reduce financing risks.

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