Marfrig Bonds Decline as Moody’s Reviews Rating: Sao Paulo MoverVeronica Navarro Espinosa and Denyse Godoy
Marfrig Alimentos SA’s bonds fell the most in five weeks after Moody’s Investors Service put the Brazilian meatpacker’s rating under review for a reduction on concern it’s not generating enough cash to meet debt payments.
The yield on the company’s dollar debt due in 2016 soared 1.27 percentage points to 11.16 percent, the steepest increase since April 18, according to data compiled by Bloomberg. The price fell 3.5 cents to 95.69 cents on the dollar. Shares dropped 1.6 percent to 7.35 reais.
Marfrig may have trouble paying the 3.3 billion reais ($1.6 billion) of debt coming due in the next two years as it struggles to generate cash, Moody’s analysts including Marianna Waltz wrote in a report published after the close of trading yesterday. The meatpacker is rated B2, five steps below investment grade.
Marfrig last month announced plans, which include selling South American plants, to cut its debt by $1 billion after posting a net loss of 81.2 million reais in the first quarter.
The Sao Paulo-based meatpacker’s press office declined to comment when contacted by Bloomberg News.