Fitch Rates Cargill Inc.'s Proposed $450MM Sr Unsec. Notes 'A'; Outlook Stable

Business Wire, March 04, 2009

CHICAGO -- Fitch Ratings has assigned an 'A' rating to Cargill, Incorporated's (Cargill) $450 million 7.35% senior unsecured notes due March 6, 2019. The ratings for Cargill and its subsidiaries are as follows:

Cargill

--Long-term Issuer Default Rating (IDR) 'A';

--Senior unsecured notes 'A';

--U.S. medium-term notes 'A';

--Euro medium-term notes 'A';

--Credit facility 'A';

--Short-term IDR 'F1';

--Commercial paper 'F1'.

Cargill Ltd.

--Short-term IDR 'F1';

--Commercial paper 'F1'.

Cargill Global Funding PLC

--Short-term IDR 'F1';

--Commercial paper 'F1'.

Cargill Asia Pacific Treasury Ltd

--Short-term IDR 'F1';

--Commercial paper 'F1'.

The notes were issued from the company's medium-term note (MTN) program. The net proceeds are expected to be used to repay Cargill's $500 million 3.625% notes maturing March 4, 2009. The Rating Outlook is Stable.

Cargill's ratings reflect its competitive position as the largest agricultural company based in the United States and one of the largest privately owned companies in the world. Its operations span every major country and almost every agricultural commodity. Key agricultural operations include oilseed processing, corn milling, meat processing, fertilizer production and animal nutrition. The ratings incorporate Cargill's high geographic and product line diversification, which lessens operating earnings volatility associated with the agricultural sector.

The ratings also factor in the company's liquidity, which is enhanced by readily marketable inventory (RMI) and substantial cash balances. Cargill's majority equity stake in The Mosaic Company (Mosaic) is currently valued at approximately $11 billion. Cargill has the option to monetize or add to its investment in Mosaic, although management has not indicated a plan to do so. Balancing out

Cargill's credit strengths are the company's significant exposure to higher risk financial businesses and weaker near-term demand for agribusiness and fertilizer products.

Cargill reported substantial earnings growth for the fiscal first half of 2009 ended Nov. 30, 2008. Net earnings increased 43% to $2.68 billion, from $1.87 billion for the same period a year ago. Excluding the significant contribution from its Mosaic fertilizer business, earnings were just below the same period last year. The pace of Cargill's overall earnings growth is likely to slow with the weak global economy. However, Cargill has benefited from recent declines in agricultural commodity prices by using less working capital, maintaining higher cash balances, improving cash flow from operations and reducing debt.

In addition to evaluating traditional credit measures, Fitch makes several analytical adjustments for Cargill. Fitch's analysis of agricultural companies takes into consideration leverage ratios that exclude debt used to finance RMI. This commodity inventory is highly liquid and generally hedged. Similarly, interest expense on debt used to finance RMI is reclassified as 'cost of goods sold'. Fitch also excludes the debt and related earnings and interest expense of Mosaic when evaluating Cargill's credit metrics. While Cargill retains a consolidated majority interest in Mosaic, Mosaic's debt is non-recourse and not guaranteed by Cargill. With the adjustments described above, Cargill's leverage (total debt to operating EBITDA) was 1.8 times (x) for the latest 12 months ended Nov. 30, 2008, and EBITDA to gross interest expense was 6.6x. On an unadjusted basis, total debt to operating EBITDA was 1.6x and EBITDA/interest was 8.3x.

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