Fitch Rates Tereos' Planned Notes 'B+(EXP)'

Fitch Ratings
Monday, January 10, 2022
Fitch Ratings has assigned Tereos SCA's (Tereos) planned senior unsecured notes issue an expected 'B+(EXP)' rating with a Recovery Rating of 'RR5'. The assignment of the final instrument rating is contingent on the placement of the notes with final documents materially conforming with the information received by Fitch during the rating process. The notes will be issued by Tereos Finance Groupe 1 (FinCo) and the company plans to use the proceeds for debt-refinancing purposes. The notes are rated in line with other senior unsecured debt that is currently outstanding at Finco, ie one notch below Tereos SCA's 'BB-' Issuer Default Rating (IDR), reflecting their structural subordination to prior-ranking debt at Tereos operating entities and the high share of secured debt within the group's total debt. The 'BB-' IDR of Tereos reflects its resilient market position as the second-largest sugar producer globally with an asset-heavy business model, operations and raw-materials sources spread across Europe and Latin America and a pricing mechanism for beetroot supply that protects profitability from sugar-price swings. Also, it benefits from moderate product diversification and mid-sized scale compared with that of global commodity traders. This is balanced by high leverage that is more consistent with a lower rating category.
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