Fitch Ratings said on June 2 that it will withdraw its credit ratings on Fonterra Co-operative Group, following the dairy co-operative's decision to end its engagement with the rating agency.
Fonterra notified the market on May 22 that it would terminate its relationship with the external credit rater as part of a move to focus on operating as a simpler business. The company remains dual-rated at present, with continued coverage from S&P Global Ratings.
According to Fitch, the ratings withdrawal is intended to take place on or about July 1 and is being done for commercial reasons. At present, Fitch assigns an international Long-Term Issuer Default Rating of 'A' to Fonterra, with a stable outlook. The agency also rates the company's senior unsecured notes at 'A'.
The announcement leaves Fonterra maintaining at least one external credit rating, as S&P Global Ratings will continue to provide ratings coverage. Beyond the timetable and the stated reason of commercial considerations, Fitch's release does not expand on operational or financial implications for the co-operative or its securities.
Context and implications
Fonterra's decision to stop engaging with one of its two external credit rating agencies has prompted Fitch to move to withdraw its published ratings. Fitch has set a provisional withdrawal date near the start of July, while reaffirming the current rating levels prior to removal.
The public statements in this sequence of events are limited to the company’s aim to simplify its operations and Fitch’s stated commercial rationale for the withdrawal. The ongoing S&P Global Ratings coverage means Fonterra will not be left entirely without third-party credit assessment.
Key facts repeated
- Fonterra announced on May 22 that it will end its engagement with Fitch.
- Fitch said on June 2 it intends to withdraw its ratings on or about July 1 for commercial reasons.
- Fitch currently holds an international Long-Term Issuer Default Rating of 'A' on Fonterra, with a stable outlook, and rates the company’s senior unsecured notes at 'A'.