DBRS Places Commercial Paper Rating of Potash Corporation of Saskatchewan Inc. Under Review with Negative Implications

DBRS Limited (DBRS) has today placed the R-1 (low) Commercial Paper (CP) rating of Potash Corporation of Saskatchewan (Potash or the Company) Under Review with Negative Implications. This action does not affect the Company’s Issuer or Senior Unsecured Debt ratings, which remain at BBB (high) with Stable trends.

Because of continued weakening in global fertilizer pricing, Potash’s Q4 2015 results were weaker than expected and, as a result, a more cautious outlook for 2016 was required. The Company also reduced its quarterly dividend by 34%.

Potash’s CP rating was traditionally supported by its superior liquidity position and cash flow-generating capacity. While liquidity in terms of credit facility availability and cash remains strong, the Company’s annual operating cash flows (OCF) have been declining because of deteriorating market conditions and fertilizer pricing. The current level of OCF, which is expected to decline further in 2016, appears to be incompatible with an R-1 (low) CP rating.

DBRS anticipates resolving the Under Review status shortly.

Notes:
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are Rating Companies in the Mining Industry (October 2015), Rating Companies in the Industrial Products Industry (June 2015) and DBRS Criteria: Commercial Paper Liquidity Support for Non-Bank Issuers (April 2015), which can be found on our website under Methodologies.