LATAMNEWS: Brazil Meatpackers May Get a Credit Rating Boost on ASF: Analyst

(Bloomberg) -- As the outbreak of African swine fever in Asia boosts Chinese meat import demand, Brazilian suppliers JBS, Minerva, Marfrig and BRF are set to get a boost to export revenues and margins in 2Q19 and 2020, according to Lucror Analytics.

These positive fundamentals for the next 12-18 months may trigger credit rating upgrades for BRF and JBS, Lucror analyst Soummo Mukherjee said in report

BRF is firm’s top pick in the sector as the most convincing deleveraging path leading to rating upgrades; recommendation kept “buy” and credit bias “positive”

Its bonds expected to trade close to BBB- credits such as Votorantim and Gerdau

For JBS, upward revisions seen as long as company doesn’t make sizeable acquisitions

“Comparing JBS’ metrics to higher rated but smaller and less diversified peers such as Tyson and Smithfield, the JBS bonds look very attractive”

Co.’s ability to keep leverage in the 2-3 times range should support higher ratings and overall bond valuations in line with a BB+ credit

2019-11-28

By Fabiana Batista