Yara International ASA

The stable outlook on Yara reflects our view that it will maintain adjusted FFO to debt of about 30%-45% through the cycle, which we view as commensurate with the rating. This is based on our assumption that, in 2019, Yara's adjusted EBITDA will recover to $2.1 billion-$2.2 billion, benefiting from its improvement program; additional volumes from capacity expansions and acquisitions; and recovery in prices of fertilizers from the bottom of the cycle conditions seen in 2016-2017. We could lower the rating if Yara's adjusted FFO-to-debt ratio declined below 30%. This could occur, in our view, if Yara's margins declined as a result of further pressure from the European natural gas prices, or if the company increased its capital expenditure (capex),

...Supply and demand balance in nitrogen and phosphates will be key to the strength and pace of fertilizer price recovery. Risks over the medium term include resumed exports from China if nitrogen prices recover sufficiently, and potentially material capacity additions in Iran. In phosphate, capacity additions at OCP Group and Ma'aden could pressure prices and operating rates in the coming years. At the same time, we assume that falling inventories and gradually improving grain prices, albeit from a historically low level, should support farm economics and demand for fertilizers....

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