Moody’s Frets Over Sadia Raw Materials Costs

Moody’s has cut the outlook to stable from positive on Brazilian pork and poultry processor Sadia’s Ba2 local currency corporate family and senior unsecured foreign currency ratings. The actions affect $250m in guaranteed senior unsecured notes due 2017 issued by Sadia Overseas with an unconditional and irrevocable guarantee from Sadia, says the agency. The change in outlook was prompted by a sharp rise in soy and corn prices, the main raw material input for poultry and pork production. Moody’s also worries about Sadia’s capital intensive growth plans for the next few years, which are likely to pressure the company’s operating margins and free cashflow, the agency says. In June, S&P upgraded Sadia to BB+ from BB.