Moody's lifts Sadia notes, confirms Brasil Foods

Moody's Investors Service said it confirmed Brasil Foods SA's Ba1 corporate family rating following the company's successful public offering of common shares and upgraded the $250 million 6 7/8% guaranteed senior unsecured notes due 2017 issued by Sadia SA subsidiary Sadia Overseas Ltd. to Ba1 from B2.

This concludes the review for possible downgrade at Brasil Foods and review for possible upgrade at Sadia. The outlook is stable.

The R$5.2 billion of net proceeds from Brasil Foods' offering will be used for debt reduction following the company's merger with Sadia.

The upgrade of the notes reflects the addition of Brasil Foods as a joint and several guarantor.

The agency said the confirmation of the Ba1 rating for Brasil Foods reflects the considerable synergy opportunities likely to result from the merger as well as the combined company's increased scale and attractive brand portfolio.

The Ba1 rating, however, is constrained by the susceptibility of the company's revenues, earnings and cash flow to foreign exchange variation, export market disruptions as well as to the volatility of dairy and grain commodity costs, Moody's added.

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