Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's rates E.I. du Pont de Nemours and Company's (Corteva's) new notes A3

12 May 2020

New York, May 12, 2020 -- Moody's Investors Service, ("Moody's") assigned A3 ratings to E.I. du Pont de Nemours and Company's (EID's) proposed senior unsecured notes. All rated debt is at the EID level, which is a wholly-owned operating subsidiary of the holding company Corteva Inc.; EID is known commercially as Corteva Agriscience. Roughly half of the proceeds from the debt issuance are expected to be used to prepay a portion of the company's unfunded pension liability, leaving the company's gross adjusted leverage unchanged for this portion of the issuance, with the balance of proceeds held in cash to shore up liquidity and serving as an offset to seasonal working capital needs, which tend to be very large and peak at about $4.0 billion. The outlook on the ratings is stable. The company's short-term commercial paper rating is unchanged at Prime-2.

"This new note issuance will represent the first public debt issued by EID (Corteva) since the Dow-DuPont Ag combination and subsequent spin," according to Joseph Princiotta, SVP at Moody's. "Corteva is the largest multinational agricultural pure-play company, with leading seed and crop protection franchises and a management team that has extensive experience in their respective positions." Princiotta added.

Assignments:

..Issuer: E.I. du Pont de Nemours and Company

....Senior Unsecured Notes, Assigned A3

RATINGS RATIONALE

The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The chemical sector in general and the Ag subsector in particular have been affected by the shock, especially miles driven and the resulting demand for corn-derived ethanol, and the impact on foreign exchange markets and the effects on earnings in foreign countries. We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.

We expect Corteva to maintain a credit profile consistent with the A3 ratings, including a strong balance sheet with modest adjusted financial leverage; disciplined investment in growing the business including occasional bolt-on acquisitions to strengthen the portfolio; an appropriate dividend payout ratio; adequate liquidity to support seasonal working capital surges; and share repurchases, post-covid crisis, with excess cash flow when preceding priorities are met.

Corteva's credit profile reflects its scale, market positions, franchise strength, strong distribution and farmer relationships, and a robust pipeline that position it very well in what continues to be a competitive and consolidating global agricultural landscape. The profile also reflects ongoing pressures in the ag space, due primarily to low crop prices, unpredictable weather conditions, weak farm economics, and a highly competitive market with large well-capitalized players competing for market share and growth and facing the risk of share loss from competitors' new products.

The positives are tempered by the extreme seasonality of the business, much of which is due to the concentration in seeds and the geographic concentration in North America. Since about 80% of seed sales occur in the first half of the year, working capital builds over the first three quarters leading to peak seasonal debt of about $4 billion in Q3. The majority of these borrowings are repaid in Q4 when cash is collected. A portion of the proceeds from this new issuance is intended to boost cash balances and reduce seasonal borrowings, effectively smoothing peak seasonal debt, albeit modestly.

Corteva's adjusted EBITDA was down 3.9% to $1.99 billion in 2019, on a pro forma basis, due mainly to headwinds from fx and weather conditions in North America that resulted in 11 million (or 7%) fewer corn and soybean acres planted. Pro forma adjusted gross and net leverage were roughly 1.8x and 1.1x, respectively at year end, with 'debt' consisting almost entirely of Moody's adjustments, including $4.1 billion in pensions, $560 million operating leases, plus outstandings of legacy MTNs. Prior to covid, 2020 was expected to benefit from a back-to-normal NA planting season, tailwinds from new products, additional cost reduction synergies and US government support to farmers to offset the negative impact from the trade dispute with China.

However, company EBITDA guidance for 2020, previously at $2.2 billion, is withdrawn due to covid-related uncertainties, mainly the impact from foreign exchange and weakened currencies in Brazil, Canada and Mexico, and from what could be a 5-7 million acre reduction in planted corn in the U.S. next year. The demand for corn-derived ethanol, which is mixed with gasoline, is expected to be down as Covid has resulted in substantially fewer miles driven. The demand level in China and the quantity and timing of US government stimulus to farmers are also pertinent to how 2020 shapes up for the Ag industry and Corteva.

Despite these uncertainties, the company will benefit from tailwinds including $230 million in synergies and productivity targets and $120 million from new product contributions. Moreover, the year got off to a good start with a strong first quarter, an important quarter seasonally given the proportion of the NA and Europe markets in the portfolio, as the recovery in NA area planted of 13 million acres may exceed the 11 million acre guidance. Higher seed pricing and volumes drove 715 bp improvement YOY in seed EBITDA margin to 23.7%. Lower costs, which totaled $70 million in the quarter, and new crop protection products also supported a strong quarter; total EBITDA was $794 million, better than Moody's expected.

ESG factors are currently not material to the credit profile and ratings. The most significant ESG factor stems from PFOA/PFAS litigation risk, which is currently fully indemnified by The Chemours Company (Chemours) (Ba3 negative). Chemours lawsuit against EID (Corteva) and DuPont seeking indemnification caps and return of the 2015 spin-related dividend was recently dismissed in Delaware Chancery Court, sending the dispute back to arbitration. Chemours is appealing the decision, but Moody's believes the ultimate resolution will be a settlement between the parties, with Chemours likely bearing the brunt of the PFAS costs over the next few years. Under the Corteva Separation Agreement, Corteva and DuPont will share PFAS liabilities 50% each up to $300 million; above this amount, the sharing will be 29% Corteva and 71% Dupont.

Social risks are associated with genetically modified seed products, which have been sold for decades but in some countries are still controversial and outlawed. Governance is low given the public status of this large multi-national company with conservative financial policies.

We view Corteva's liquidity profile currently as excellent and supportive of its Prime-2 rating for its commercial paper program. As of March 31, 2020 the company's liquidity was supported by roughly $2.0 billion in cash and marketable securities, two $3.0 billion committed revolvers which back up the $5.0 billion CP program, a $1.3 billion repurchase facility, and strong cash flow from operations on an annualized basis. Seasonal use of the facilities increased short term debt by roughly $2.0 billion leaving roughly $3.6 billion availability on the revolvers. The credit facilities contain a financial covenant that total debt/capitalization can't exceed 0.60x, which we expect Corteva to remain in compliance with. We note the ag business of Corteva is highly seasonal with large working capital needs, typically in the second and third calendar quarters, requiring seasonal borrowings funded by CP usage that can surge up to $4.0 billion before being liquidated in subsequent quarters.

The stable outlook anticipates adherence to conservative financial policies that support the A3 ratings. The stable outlook also anticipates continued success of new product launches and further growth in revenues and EBITDA, organically or through modest M&A.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING:

We would be unlikely to consider an upgrade to the ratings in the early years of independence until there's better clarity and impact from new product launches and cost synergies. Litigation risk related to Chemours could also impede upgrade consideration until there's better clarity in these matters. Beyond that, we could consider an upgrade if Corteva maintains a solid balance sheet with adjusted leverage consistently in the mid-1.0x range, establishes a track record of successful new product launches and sustains a robust research pipeline. Also, a consistent and well-managed pattern of seasonal working capital and seasonal debt peak usage would be important to a higher rating consideration.

We would consider a downgrade if balance sheet leverage were to increase materially, either from a deterioration in earnings or from large or frequent debt-financed acquisitions. Leverage rising to the mid-2.0x range or RCF/TD falling below 30%, while lacking good visibility to quick recovery, could also lead to a downgrade. A material weakening of cash flow or liquidity could also pressure the ratings.

The principal methodology used in these ratings was Chemical Industry published in March 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1152388. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Corteva Inc., headquartered in Wilmington, Delaware, is one of the largest Agricultural Chemicals companies, with leading positions and a robust pipeline in Seeds & Traits and Crop Protection, with over 100 manufacturing sites, 150 R&D sites, 12,000 patents, and digital capabilities and programs. Revenues for 2019 were approximately $13.8 billion, consisting of a $6.3 billion crop protection business and $7.5 billion seeds business.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Joseph Princiotta
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Glenn B. Eckert
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com