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Moody's ups Land O'Lakes
Moody's Investors Service said it upgraded the senior secured debt ratings of Land O'Lakes Inc. to Baa2 from Baa3 and upgraded the $191 million of 7.45% subordinated capital securities of Land O'Lakes Capital Trust I to Ba1 from Ba2.
The debt affected by the upgrade includes Land O'Lakes' $375 million senior secured revolving credit facility due April 2013, $155 million of 6.24% senior secured notes due December 2016, $85 million of 6.67% senior secured notes due December 2019 and $85 million of 6.77% senior secured notes due 2021.
The outlook is stable.
The upgrade reflects the view that Land O'Lakes is fundamentally an investment-grade company, the agency said. This view is based largely on the cooperative's demonstrated ability to generate relatively stable operating performance through difficult operating conditions such as experienced over the past two years due to commodity price volatility.
The ratings reflect the strength of the eponymous Land O' Lakes brand and the cooperative's high market shares in crop inputs, shell and specialty eggs and animal feed, the agency said.
The ratings also take into consideration the significant improvements that Land O' Lakes has made to its business portfolio over the past several years through the sale of its swine, liquid eggs and other low-margin businesses and through other ongoing operational restructurings, the agency added.
These strengths are balanced against the cooperative's high and increasing exposure to agricultural and commodity markets that results in periods of high sales and cash flow volatility and increased earnings correlation among related operating segments, Moody's said.
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