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Announcement:

Moody's affirms Corn Products Baa2 rating, stable outlook

Global Credit Research - 21 Jun 2010

$1.3 billion acquisition of National Starch will not affect rating or outlook

New York, June 21, 2010 -- Moody's Investors Service affirmed the Baa2 long-term debt ratings of Corn Products International, Inc. ("CPO") today, following the company's announcement that it has reached a definitive agreement to acquire National Starch from Netherlands-based Akzo Noble for $1.3 billion cash, a portion of which will be funded with a new issuance of CPO shares. The rating outlook remains stable.

Ratings affirmed:

Corn Products International, Inc.:

- Senior unsecured debt at Baa2;

- Senior unsecured debt shelf at (P)Baa2.

The affirmation of CPO's Baa2 rating and stable outlook reflects Moody's view that, while the proposed mostly debt-financed transaction will result in a significant increase in financial leverage, there is sufficient financial cushion in CPO's current lightly-levered capital structure to tolerate the incremental debt. Although the company has not determined the amount of shares it plans to issue, Moody's assumes that at least 10% of the $1.3 billion cash purchase price will be financed with equity.

The rating affirmation also reflects the good strategic fit of National Starch, its stronger profit margins relative to Corn Products', and other transaction benefits including added scale, geographic and customer expansion, improved product mix and broader sales diversification. Moody's also takes into consideration the use of equity to finance a part of the transaction.

"National Starch appears to fit reasonably well with CPO's core ingredients business, and given the limited amount of operational overlap, we expect the integration to be fairly straightforward." said Brian Weddington, a Moody's senior credit officer.

"National Starch adds a higher-margin mix of value-added products, a leading global market position in modified starches, and a solid entry into the European market that should give Corn Products more clout with its global customers," added Weddington.

The transaction also further reduces Corn Products' exposure to the declining demand trends in North America for high fructose corn syrup.

Closing financial leverage approximates 3.0 times EBITDA, which is generally within an acceptable range for the Baa2 rating category. However, we expect Corn Products to maintain additional cushion in its capital structure to absorb the earnings and cash volatility inherent in its narrowly defined commodity-like business. Thus, the company is most comfortably positioned at Baa2 when leverage is sustained comfortably below 3.0 times EBITDA.

We estimate that CPO should be able to reduced leverage by at least one-half times EBITDA each year, which restores adequate cushion to the balance sheet within 12 months.

The last rating action for Corn Products occurred on July 29, 2008 when Moody's changed the rating outlook to stable from negative in connection with a proposed merger with Bunge Ltd, a deal that was later terminated.

The principal methodology used in rating this issuer was Global Food -- Protein and Agriculture (September 2009), which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issue can also be found in the Rating Methodologies sub-directory on Moody's website.

Corn Products International, Inc., based in Westchester, Illinois, is the third largest corn refiner in the world, manufacturing a range of corn-based sweeteners, starches and related products. The company has 29 plants spanning 15 countries, and customers in almost 60 industries including food, soft drinks, brewing, pharmaceutical, corrugating, paper and textile. Net sales for fiscal year ended 2009 were $3.7 billion.

National Starch, based in Bridgewater, New Jersey, a subsidiary of Akzo Nobel, is the leading global supplier of specialty starches with a principal focus on supplying the food industry. It also serves the papermaking market and supplies high-value industrial starch technology for a variety of other consumer and industrial products and processes. The company has operations in 30 countries and reported net sales for fiscal 2009 of $1.2 billion.

New York
John Diaz
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Brian Weddington, CFA
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's affirms Corn Products Baa2 rating, stable outlook
No Related Data.
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