NEW ZEALAND - Credit ratings agency Fitch Ratings has downgraded Fonterra from 'A' to 'AA-', following a similar move by Standard and Poor's earlier this week.
Fitch said in a press release that Fonterra had recently illustrated vulnerability to adverse conditions such as market volatility and low milk prices.
The agency said that certain moves by Fonterra had weakened the company's financial flexibility, such as the decision not to reduce advance rate milk payments, capacity and foreign investments, and loans offered to farmer shareholders earlier in the year.
However, Fitch said that Fonterra has a stable outlook for the future and that it is expected to return to an 'A' rating in a few years. Fitch also recognised the strong global market position of the co-operative's ingredients business.
TheCattleSite News Desk