DBRS Morningstar Assigns Rating of BBB (high), Stable Trend, to Saputo Inc.'s New Debt Issuance

DBRS Limited (DBRS Morningstar) assigned a rating of BBB (high) with a Stable trend to Saputo Inc.’s (Saputo or the Company; rated BBB (high) with a Stable trend by DBRS Morningstar) $700 million 2.242% Series 7 Medium Term Notes (the Notes) due June 16, 2027, which closed on June 16, 2020. The rating assigned to this newly issued debt instrument is based on the rating of an already-outstanding debt series of the above-mentioned debt instrument.

The Notes are unsecured and will rank pari passu to the notes of every other series, as well as all other existing and future unsecured and unsubordinated indebtedness of the Company. Saputo intends to use the Notes to refinance the second tranche of the nonrevolving term facility made available to the Company in connection with its acquisition of Dairy Crest plc, and the remainder of the net proceeds will be used for (1) the repayment of portions of the revolving loan facilities of Saputo Dairy Australia Pty Ltd. drawn for general corporate purposes and in connection with the acquisition of the specialty cheese business of Lion Dairy & Drinks Pty Ltd. or (2) general corporate purposes.

Saputo’s current ratings continue to be supported by its leading market position, diversification of operations by distribution channel and geography, and strong free cash flow generation. The ratings also continue to reflect the Company’s exposure to volatile commodity prices, the highly competitive industry, and the risks associated with the mature markets in which Saputo operates, all of which are highly regulated.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodologies are Rating Companies in the Consumer Products Industry (August 15, 2019) and DBRS Morningstar Criteria: Rating Corporate Holding Companies and Parent/Subsidiary Rating Relationships (November 25, 2019), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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