Moody's downgrades BRF

Moody's Investors Service said it downgraded BRF SA's corporate family rating to Ba2 from Ba1.

The ratings downgraded include BRF's $118 million guaranteed global notes due 2022 to Ba2 from Ba1; €500 million global notes due 2022 to Ba2 from Ba1; $500 million global notes due 2023 to Ba2 from Ba1; and $750 million global notes due 2024 to Ba2 from Ba1.

Subsidiary BFF International Ltd.'s $86 million guaranteed global notes due 2020 also were downgraded to Ba2 from Ba1.

The outlook remains negative.

The action was triggered by the company's weak credit metrics and an expectation that leverage will remain high in the next few quarters, Moody's said.

BRF's leverage increased substantially to 4.6x in 2016 and 5.6x in 2017, away from both of the downgrade triggers of 3.5x and the company's own leverage targets, the agency said.

Among the factors that contributed to the deterioration in the company's leverage and metrics are the disbursements relative to mergers and acquisitions activity, weak margins in 2016 and 2017 following the steep increase in Brazil's corn prices and poor operating performance, Moody's added.

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