CF Industries Holdings Ltd. (CF:US)’s credit ratings were raised to investment grade as the largest U.S. maker of nitrogen fertilizers benefits from higher prices for crop nutrients. Its share price rose to a record.
Moody’s Investors Service changed the ratings to Baa3 from Ba1 with a “positive” outlook, according to a statement today. The improvement was based on the Deerfield, Illinois-based company’s cash flow and low debt levels as the price of natural gas, a key component of making the fertilizer, drops.
“An upgrade is likely over the next four quarters if management continues to build a track record of prudent management and the fertilizer industry conditions remain robust,” William Reed and Steven Wood of Moody’s wrote in the report.
CF is benefiting from higher prices for nitrogen crop nutrients, including urea, as U.S. farmers put this year’s corn crop in the ground. The company, which acquired nitrogen- industry competitor Terra Industries Inc. in 2010, is scheduled to report first-quarter earnings tomorrow.
The company’s $800 million of 7.125 percent notes due May 2020 rose 3.75 cents to 123.5 cents on the dollar as of 1:48 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
CF rose (CF:US) 2.5 percent to $200.13 at the close in New York, the highest since the company began trading in 2005. The shares have gained 38 percent this year.
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