Moody’s cuts Suedzucker hybrid notes

Moody’s Investors Service said it downgraded the rating on Suedzucker International Finance BV's €700 million junior subordinated notes to Ba3 from Ba2.

The Baa2 long-term issuer ratings and the Prime-2 short-term rating of Suedzucker AG's and of Suedzucker International Finance are unchanged.

The outlook is negative.

"The downgrade of Suedzucker's junior subordinated notes to Ba3, four notches below the company's issuer rating, reflects our expectation that the headroom under the cash flow covenant of the hybrid instrument is reducing and will remain limited over the coming 18 to 24 months,” Paolo Leschiutta, Moody's senior vice president and lead analyst for Suedzucker, said in a news release

"A breach of the covenant stated in the annual report would result in a temporary cancellation of the four quarterly coupon payments on the hybrid following the publication of the AR. The lower rating on the notes reflects a higher risk of a potential impairment of the hybrid instrument if such event occurs."

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