S&P Global Ratings upgraded Bunge Ltd. to BBB+ from BBB on Tuesday, after the grain and oilseed processor announced a merger with Vittera Ltd in a deal that includes a commitment to repurchase $2 billion of Bunge stock in the 18 months following the close. “Bunge, pre this transaction, continues to maintain very low leverage, which has provided it with the balance sheet flexibility to consummate this transformational acquisition without materially pressuring its credit measures,” the rating agency said in a statement. The company has sustained debt to EBITDA of below 1.5x for two straight years as its core agribusiness segment has benefitted from acombination of strong oilseed crush and merchandising margins while the margins in its specialty oils segment have benefitted from strong food and renewable feedstock demand, said the statement. S&P is expecting the company’s leverage to remain near or below 1.5 times for the next few quarters prior to the merger, when it’s expected to rise to about 1.7 times. “We project the combined entity will sustain leverage below 2x, supporting a potential upgrade to ‘A-‘ if the acquisition closes without any material regulatory impediments,” said S&P.
