Ratings agency S&P Global says Fonterra's credit ratings has not been affected by the co-operative's earnings downgrade for the year to July 31, even though it expects its debt threshold to be exceeded in the current financial year.
Fonterra yesterday increased the milk price for the current season to $6.75/kg from $6.55/kg and now expects to be outside its target end-of-year gearing range of 40 per cent to 45 per cent.
"We expect its debt to ebitda [earnings before interest, tax, depreciation and amortisation] to breach our downward threshold of 4 times for fiscal 2018," the agency said.
"Fonterra has very limited financial headroom within the current rating," it said.
"That said, we believe the group remains committed to retaining the 'A-' long-term credit rating and has a number of levers to manage debt levels."