Additionally, Fitch has assigned a BBB rating to Corn Products’ $200 million in 5.62% private placement notes due in March 2020. The private placement notes contain a maximum leverage ration of 3.25:1 and a minimum interest coverage ratio of 3.25:1. These terms are not present in other Corn Products notes.
Fitch described the outlook for Westchester, Illinois, U.S.-based Corn Products as stable and said the company’s ratings are supported by its competitive position in corn refining. Conservative financial policies and financial stabilities also are positives, but the company’s smaller size (versus global competitors) and “singular focus” on corn wet milling is a constraint. The volatility of the company’s operating income and cash flow, with agricultural cycles, also was cited by Fitch as a constraining factor.
“Corn Products has made significant progress integrating the National Starch business of AkzoNobel N.CV., which it acquired for $1.4 billion on Oct. 1, 2010,” Fitch said. “The acquisition was primarily debt-financed, with a $900 million notes issuance.”
Looking forward, Fitch said continued strong financial performance and conservative financial policies may result in a positive ratings action in the intermediate term. By contrast, negative rations actions may occur if the company were to make another debt-laden acquisition without first strengthening credit metrics, share repurchases or weaker-than-expected earnings.