Dairy Company Koninklijke FrieslandCampina's Hybrid Securities Assigned 'BB+' Rating; Intermediate Equity Content

Koninklijke FrieslandCampina (Royal FrieslandCampina, RFC) intends to issue €300 million of new perpetual capital securities (hybrid securities), to proactively refinance its outstanding €300 million perpetual hybrid securities that have a first reset date in December 2025. We assigned our 'BB+' issue rating to the proposed hybrid securities, to reflect their subordination and optional interest deferability, and we assess the securities as having intermediate equity content (50% debt, 50% equity) until their first reset date in January 2030. We see the proposed transaction as being leverage neutral to RFC because the company is looking to redeem and replace its outstanding hybrid securities with new securities of the same size and same equity content. RFC's operational performance in the first half of

...October 11, 2024 - Koninklijke FrieslandCampina (Royal FrieslandCampina, RFC) intends to issue 300 million of new perpetual capital securities (hybrid securities), to proactively refinance its outstanding 300 million perpetual hybrid securities that have a first reset date in December 2025. - We assigned our '##+' issue rating to the proposed hybrid securities, to reflect their subordination and optional interest deferability, and we assess the securities as having intermediate equity content (50% debt, 50% equity) until their first reset date in January 2030. - We see the proposed transaction as being leverage neutral to RFC because the company is looking to redeem and replace its outstanding hybrid securities with new securities of the same size and same equity content. - RFC's operational performance in the first half of 2024 was in line with our base-case scenario and we continue to forecast adjusted debt to EBITDA of about 3.5x and funds from operations (FFO) to debt of 15%-25% for...

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