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UPDATE 1-Moody's cuts Bunge outlook to negative after IOI Loders deal

(Adds Moody's analyst quote, adds stable ratings from S&P and
Fitch, adds background on IOI Loders deal, adds share price,
adds byline)

By Karl Plume

Sept 13 (Reuters) - Moody's Investors Service cut its
outlook for Bunge Ltd on Wednesday and cautioned that
without much improved earnings it could cut the U.S.
agribusiness' credit rating to just a step above junk status.

The agency revised Bunge's outlook from stable to negative
after it opened a $900 million credit facility to help fund a
deal for a controlling stake in Malaysian palm oil producer IOI
Loders Croklaan.

Moody's maintained Bunge's Baa2 long-term debt rating, but
warned that without improved operating performance and cash
flow, the company risks a downgrade to Baa3, one notch above

Its long term ratings for Bunge rivals Archer Daniels
Midland Co and Cargill Inc are A2, three steps
above Bunge.

Despite stable credit metrics in recent years, two straight
quarters of weak results raised concern that debt-funded
acquisitions could weaken Bunge's credit rating, John Rogers,
senior vice president at Moody's, said in a release.

Bunge on Tuesday said it struck a deal to buy 70 percent of
IOI Loders Croklaan from parent IOI Corp Berhad for
$946 million to expand its higher-margin food ingredients
business. The deal came two months after the company announced
sweeping cost cuts to reverse slide in profits and after
rebuffing a takeover approach from Glencore earlier
this year.

Global grains traders have been seeking ways to diversify
and boost earnings amid a global grains glut that has dragged
down commodity prices and squeezed operating margins.

Moody's said its stable rating had been based on the
expectation that Bunge's trailing four-quarter earnings before
interest, taxes, depreciation and amortization, or EBITDA, would
be between $1.6 billion and $1.9 billion.

But after a weak first half of 2017, that was likely to fall
to $1.25 billion to $1.45 billion, boosting the company's pro
forma debt-to-EBITDA ratio to 3.5x, Moody's said.

Ratings agencies Fitch and S&P Global said Tuesday that
their Bunge ratings remain unchanged after the deal, citing
expectations for an earnings turnaround through 2018.

S&P said it expects Bunge's debt-to-EBITDA ratio by late
2018 to fall below the 3x, a critical level above which the
ratings agency could consider a downgrade.

Fitch anticipates Bunge's gross leverage, or debt-to-EBITDA,
would remain above the mid-3x level this year before moderating
into 2018 with an anticipated rebound in earnings.

Bunge shares were up 1.2 percent on Wednesday at $72.29
after tumbling 5.7 percent a day earlier in the company's
steepest slide in four months.
(Reporting by Karl Plume in Chicago; Editing by Jonathan Oatis
and Andrew Hay)

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