Brazilian protein company Marfrig Global Foods was upgraded to BB from BB- by S&P . The upgrade comes after the company’s U.S. operations thrived due to strong beef demand and high cattle availability. This has led to record high cutout ratios and a significant increase in EBITDA and offsetting depressed margins in South America as per S&P. Marfrig is also increasing its investment in its Iowa and Bataguassu plants. Due to its record EBITDA, which S&P expects to hit ~BRL 13.5bn ($2.4bn) by year-end, Marfrig’s free operating cash flows should be strong at about BRL 7bn ($1.24bn) in 2021. Marfrig partially used its strong cash flows to reduce debt, increased shareholder remuneration and also acquired a 33% stake in BRF SA for close to BRL 6.5bn ($1.15bn). Besides, it has also made other minor acquisitions. S&P adds that despite the BRF SA acquisition, Marfrig’s liquidity is strong. Marfrig is rated above Brazil (BB-) with S&P noting that it generates less than 10% of consolidated EBITDA in the country.

Marfrig’s dollar bonds are slightly higher with its 9.95% 2031s up 0.24 points to 96.28, yielding 4.45%. 

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