Moody's downgrades agri solutions provider UPL, maintains negative outlook

Credit rating agency Moody's Investors Service on Tuesday downgraded agriculture solutions provider UPL to Ba1 and maintained the negative outlook on deterioration in the agrochemical industry.

Moody's has downgraded the senior unsecured rating for UPL Corporation (UPL Corp) to Ba1 from Baa3 and has also downgraded the rating on the long-term junior subordinated rating on UPL Corp's USD 400 million undated perpetual Eurobonds to Ba3 from Ba2, the credit rating agency said in a statement.

Further, Moody's has assigned a Ba1 corporate family rating (CFR) to UPL Corp and withdrawn the company's Baa3 issuer rating.

"The downgrade to Ba1 is driven by a protracted deterioration in the agrochemical industry fundamentals that will keep UPL's credit metrics weaker than our expectation for an investment-grade rating," Moody's Senior Vice President Kaustubh Chaubal said.

The Moody's rating action is following UPL's weak operating results for the third quarter of the fiscal ending March 2024 (fiscal 2024), the statement said.

"UPL entered the current industry down cycle with substantial leverage. This, combined with UPL's working-capital intensive business model and its weak liquidity have exacerbated the impact of the tight funding conditions on its credit profile," Chaubal added.