Fitch U.S. Agribusiness Outlook: Aggressive Expansion Could Increase Leverage in 2006.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. expects the U.S. agribusiness industry to experience further credit stability in 2006. Reduction of leverage by agribusiness companies over the past several years has provided the financial flexibility to keep ratings stable throughout commodity cycles and occasional industry shocks. Fitch believes that the de-leveraging related to acquisition activity during 2001-2002 is essentially finished and another large round of consolidation by the major agribusiness companies is unlikely in the near term. Cash flow priorities in 2006 include higher growth-oriented capital expenditures and acquisitions. "The quest for Verb 1. quest for - go in search of or hunt for; "pursue a hobby" quest after, go after, pursue look for, search, seek - try to locate or discover, or try to establish the existence of; "The police are searching for clues"; "They are searching for the growth will likely preclude any significant debt reduction in the near term," said Judi Rossetti, Director, Fitch Food, Beverage and Tobacco team. "Overseas expansion is likely for major U.S. processors, especially in China, South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. or Eastern Europe." Leverage may rise slightly as agribusiness processors pursue growth opportunities via international expansion, joint ventures or acquisitions. However, downward ratings pressure could result in ratings reviews if heightened capital expenditures and acquisitions lead to materially higher leverage. The publicly traded agribusiness companies can minimize the ratings effect of a major acquisition by using at least partial equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. . Short-term trade disruptions are expected from time to time and are not likely to affect ratings as long as they are resolved in a timely manner. Highly diversified operations can also offset the impact of trade disruptions. The full 'Agribusiness Outlook' can be found on the Fitch web site at www.fitchratings.com. Full outlooks and analysis for the various agribusiness segments are provided, as well as a financial review of the major individual U.S. agribusiness processors. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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