Nutrien Ltd. Assigned #BBB# Corporate Credit Rating On Merger Of Agrium Inc. And Outlook Stable

Stocks and Financial Services Press Releases Thursday March 8, 2018 11:41
TORONTO--8 Mar--S&P Global Ratings
TORONTO (S&P Global Ratings) March 7, 2018--S&P Global Ratings today said it assigned its 'BBB' long-term corporate credit rating to Nutrien Ltd. The outlook is stable.

At the same time, S&P Global Ratings removed its ratings on Agrium Inc. and Potash Corp. of Saskatchewan Inc. (PotashCorp) from CreditWatch. We view Agrium Inc. and PotashCorp as core entities to Nutrien so we are equalizing our ratings on the subsidiaries with that on Nutrien.

No structural subordination exists for Agrium's and PotashCorp's senior unsecured debt outstanding, we therefore rate this 'BBB', the same as our corporate credit rating on Nutrien.

We have also affirmed our 'A-2' global short-term and global scale commercial paper (CP) ratings on both Agrium and PotashCorp; however, we are lowering our Canada scale CP rating on PotashCorp to 'A-2' (Cdn) from 'A-1(Low), which aligns it with the 'BBB' corporate credit rating.

Our ratings on Nutrien reflects S&P Global Ratings' opinion of the company's competitive cost and leading market position in potash and nitrogen, significant scale and operational diversity, stable cash flow generation from its retail segment, and strong EBITDA margins, which rank in the top quartile of our global commodity chemicals peer group. Our assessment of Nutrien's financial risk profile benefits from the cost synergies we have incorporated into its base-case scenario.

As a result, we believe there is meaningful cushion in our estimated three-year (2018-2020) cash flow and leverage ratios at the 'BBB' rating. In our view, the company's overall competitive position and credit profile is commensurate with those of its 'BBB' rated peers.

The stable outlook reflects our view of Nutrien's market-leading position in potash and nitrogen fertilizer production; the wholesale segment's low consolidated cost structure, stable EBITDA, and margin performance in the company's retail segment; and that Nutrien's projected cash flow and leverage metrics will remain consistent with the expectations under our base-case scenario during our 24-month rating outlook period. Although our cash flow forecasts are somewhat supported by cost synergies in 2018-2020, there is significant cushion in our projected three-year (2018-2020), weighted-average cash flow and leverage ratios to accommodate unexpected market events, without weakening the company's overall financial risk profile and the 'BBB' rating.

We believe there is a low likelihood that Nutrien's business risk profile could weaken during our 24-month outlook period; therefore, a negative rating action could primarily occur if the company's FFO-to-debt and discretionary cash flow (DCF)-to-debt ratios deteriorated below the minimum levels needed to support the 'BBB' rating. Specifically, if Nutrien's three-year, weighted-average FFO-to-debt ratio fell below 30%, and the company increased its dividend payout, such that our weighted-average DCF-to-debt ratio fell below 5%, and we expected these metrics to remain below these levels for an extended period, the company's financial risk profile would no longer support the 'BBB' rating. In that case, we would lower the corporate credit rating to 'BBB-'.

Despite its strong market position in potash and nitrogen fertilizer production and the stable cash flow generation from the company's retail segment, the business risk profile is constrained by our assessment of the commodity chemicals industry risk profile. As a result, Nutrien's business risk profile is unlikely to strengthen sufficiently to support an upgrade. Nevertheless, we could consider a positive rating action if the company strengthened and maintained its fully adjusted three-year, weighted-average FFO-to-debt ratio at or above 45%, without a corresponding increase in the dividend payout ratio. An upgrade would also be contingent on the company's financial policies being supportive of maintaining these measures. Although less likely to occur during our 2018-2020 outlook horizon, we could also consider an upgrade if Nutrien achieved a meaningful expansion of its retail segment, such that it lowered the overall volatility of the company's cash flow generation and materially strengthened its return on capital.


Latest Press Release

INDORAMA VENTURES AND LOOP INDUSTRIES JV TO INTRODUCE NEW ERA IN PET AND POLYESTER RECYCLING

Indorama Ventures' world-class manufacturing and Loop's state-of-the-art recycling technology combined to invest in multi-billion dollar sustainable PET resin and polyester market opportunity Demand for supply of sustainable PET sees explosive growth...

Fitch Rates ICBCTL#s Senior Notes #AAA(tha)#

Fitch Ratings (Thailand) Limited has assigned ICBC (Thai) Leasing Company Limited's (ICBCTL, AAA(tha)/Stable/F1+(tha)) upcoming long-term senior unsecured notes a National Long-Term Rating of 'AAA(tha)'. The notes will be issued under ICBCTL's THB30...

UnionPay offers foodies exclusive fine dining experiences at a special price At Bangkok Restaurant Week 2018

The highly anticipated Bangkok Restaurant Week 2018 from Wongnai is here. The annual festival is bringing foodies fine dining experiences and special deals from over 50 most well-known restaurants across Bangkok. UnionPay, the best payment companion for...

TCEB unveils its 2019 strategy under a brand-new campaign Thailand: REDEFINE Your Business Events

TCEB today announced a launch of its new brand marketing communication campaign "Thailand: Redefine Your Business Events". The new campaign has prompted the bureau to redefine its role as an industry's partner for success. Tapping into the growing...

L1 Treasury จับมือ Airborne Capital ทุ่มทุน 250 ล้านดอลลาร์สหรัฐ เปิดตัว AltitudeOne Aviation

- AltitudeOne Aviation Ltd ("AltitudeOne Aviation") เป็นธุรกิจร่วมทุนที่เปิดตัวโดย LetterOne Treasury Services SA ("L1 Treasury") และ Airborne Capital Limited ("Airborne Capital") - AltitudeOne Aviation จะลงทุนในพอร์ตหลากหลายประเภท...

Related Topics