Bunge Limited (BG) Outlook Raised to Stable by Moody's

Moody's Investor's Service affirmed the Baa2 ratings of Bunge Limited (NYSE: BG) and changed its outlook to stable from negative. This change reflects the sustained improvement in credit metrics to levels that adequately support the Baa2 rating.

"While consistent growth in earnings remains a challenge, Bunge's EBITDA generation has stabilized in the $1.8 billion to $2 billion range. EBITDA in this range, along with a conservative balance sheet will generate credit metrics that support the company's Baa2 rating," stated John Rogers, Senior Vice President at Moody's.

Affirmations:

..Issuer: Bunge Limited

....Pref. Stock Preferred Stock (Local Currency), Affirmed Ba1

Outlook Actions:

..Issuer: Bunge Limited

....Outlook, Changed To Stable From Negative

Affirmations:

..Issuer: Bunge Limited Finance Corp.

....Senior Unsecured Regular Bond/Debenture (Local Currency), Affirmed Baa2

....Outlook, Changed To Stable From Negative

Affirmations:

..Issuer: Bunge N.A. Finance L.P.

....Senior Unsecured Regular Bond/Debenture (Foreign Currency), Affirmed Baa2

..Issuer: Bunge N.A. Finance L.P.

....Outlook, Changed To Stable From Negative

RATINGS RATIONALE

Bunge's Baa2 rating reflects its relatively conservative balance sheet (as measured by net working capital/balance sheet debt), an established position in the agricultural commodity industry, and its geographic diversity. While the company's ratings have been stressed by volatility in its financial metrics in the past, Bunge has improved Net Debt/ EBITDA in 2013 and 2014 to under 2.5x due to good EBITDA generation and debt reduction due to lower crop prices. We expect improved performance in 2015 due to the elimination of losses from its Brazilian sugarcane & ethanol segment, which remains under pressure due to low sugar prices. However, the ratings are still constrained by a low return on invested capital (ROIC). Management is focused on improving ROIC, which is expected to reach 9%, excluding the Sugar and Bio-Energy business, in 2015.

Over the next few years, Bunge's earnings and cash flow should benefit from management's stated strategy of focusing on core operations (grain and oilseeds) as well as growing their downstream food and ingredients business. Furthermore, Moody's is very positive on the growth in agricultural trade flows due to long term growth trends in developing countries and the expected improvement in their standards of living. Moreover, the long term decline in the global stock-to-use ratio (level of global inventories relative to global demand per annum) for most agricultural commodities, indicates that crop prices will remain volatile and elevated compared to historical norms. In the past, high crop prices have resulted in increased profitability at all the major global merchandisers. However, due to strong harvests over the past two years, and reduced near-term global GDP growth, crop prices are expected to remain near current levels through 2016.

The stable outlook reflects Moody's expectation that credit metrics will remain supportive of the Baa2 rating with Net Debt/EBITDA of roughly 2.5x and Funds From Operations/Net Debt of 25% A rating upgrade is unlikely at the current time. However, if the company were to sustain Net Debt/ EBITDA below 2.0x or Funds From Operations/Net Debt above 30%, Moody's would raise the company's rating. The ratings could be downgraded if Bunge's credit metrics sustainably weaken with Net Debt/EBITDA above 3.0x and Funds From Operations/Net Debt below 20%.

The principal methodology used in this rating was Trading Companies published in March 2015. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

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