Bond rating under review based on current economic climate

May 13, 2020

The rating for Federated Co-operatives Limited’s (FCL) unsecured notes has been updated to BBB (high) Under Review with Negative Implications by DBRS Morningstar, a leading bond-rating service.

The service stated in a release the rating action reflects the negative impact that COVID-19 and related aftereffects will have on FCL’s earnings. With energy being the largest segment of revenue, DBRS Morningstar pointed to decreased refinery margins, volatility in crude oil and petroleum markets and reduced fuel demand to continue throughout 2020.

DBRS Morningstar also expected negative impacts in the near-to-medium term for FCL’s home and building solutions business and continued pressure and competition in its food business.

FCL has maintained a BBB (high) rating for the last four years. The ratings allow FCL to finance some long-term debt through the issuance of 10-year bonds at historically low interest rates.

The DBRS release on its rating of FCL is available at www.dbrs.com.