Moody’s Mulls JBS Upgrade

Moody’s has put the B1 rating of Brazil’s JBS-Friboi on review for upgrade. “The review of JBS’s B1 rating was prompted by the company’s decision to use part of the IPO proceeds for debt reduction, resulting in improved leverage indicators,” says Moody’s analyst Soummo Mukherjee. The review will primarily focus on JBS’s financial and growth strategy for the next few years. Promotion to Ba3 will largely depend on JBS’s ability to keep debt to EBITDA below 3.5x on a sustainable basis, and the prospects for the company’s free cash flow generation to be less negative than historically. JBS is the fourth largest beef company in the world in terms of cattle slaughtering capacity and the largest beef processor and exporter in Brazil, Argentina and Latin America.