NEW YORK – A 'BB-' rating has been assigned by Fitch Ratings to the proposed $400 million unsecured notes due in 2020 that will be jointly issued by JBS USA LLC and JBS USA Finance Inc. These notes will be guaranteed by JBS SA, JBS Hungary Holdings, JBS USA Holdings, along with each of the issuers' wholly-owned US restricted subsidiaries and subject to certain exceptions. JBS SA will use proceeds from the bonds issuance to repay its short-and medium-term debt and for general corporate purposes.
Fitch assigned 'BB-' local currency (LC) and foreign currency (FC) Issuer Default Ratings (IDRs) to JBS USA Finance with a Stable Rating Outlook. JBS USA Finance's FC and LC IDRs are linked to the same ratings for JBS based on Fitch's parent-subsidiary rating methodology.
According to a press release, JBS' credit ratings reflect its strong business profile as the world's largest beef and lamb producer and second-largest chicken producer. The company's geographic and product diversity are also factored into JBS' ratings, which partially mitigates the risks of trade barriers and animal diseases. JBS' risk profile is reportedly higher than average because of cyclical risks associated with the meat business and the company's aggressive attitude toward growth through acquisitions.
Although JBS’ credit profile should benefit from the continued integrations and turnaround of recent acquisitions, Fitch expects that JBS' cash flows and margins will continue to be pressured by high cattle prices as well as elevated grain prices.