Ratings agencies divided over the implications to Cargill of its $22bn Mosaic spin-off, with DBRS reappraising its assessment of the US agribusiness giant, Standard & Poors stating no change, and Fitch taking the opportunity to nudge higher earnings forecasts.

DBRS analysts said they had placed its debt ratings for Cargill "under review with developing implications" after the silos-to-ingredients giant said it would break-up its 64% controlling stake in Mosaic for distribution to shareholders and for paying off debt.

"With the split-off of the investment in Mosaic, Cargill loses some exposure to the growth-oriented fertilizer sector, and the liquidity benefit the holding offered," DBRS said, while adding that, on the plus side, it could decrease Cargill's exposure to volatility too.

Mosaic is the world's top phosphate producer and a major potash producer, prices of both of which have undergone significant swings in the last four years.

Any ratings revision could depend on how Cargill handles the leeway it will gain from swapping Mosaic shares, worth some $8bn at current valuations, for debt.

Rating improval dismissed

However, rivalStandard & Poor's downplayed the impact of any debt pay-off, saying it would be used primarily used to retire short-term borrowings used to support the tos and fros of crop inventories, which the ratings group adjusted for anyway.

"Changes to our estimated credit measures following this expected debt repayment will not be significant," the agency said.

Cargill's ratio of net debt to earnings before interest, tax, depreciation and amortisation (ebitda), a key leverage metric, "will likely" end up at about 2-2.5 times, in line with the current figure of 2.5 times.

"We do not believe [Cargill's] credit measures…. will meaningfully improve to warrant a higher rating," S&P added.

Earnings hopes lifted

Fitch followed suit in saying its ratings assessment had not been "immediately affected" by the Mosaic spin-off, which follows pressure on Cargill from some charity shareholders for a way of monetising their stakes.

However, the agency highlighted that it had seen the Mosaic stake as "supportive" to Cargill's ratings, representing a "significant source of liquidity".

Fitch analysts also massaged higher its oulook for Cargill's profits, after strong first-half results released last week, supported by an early and correct call on last year's crop setbacks.

Fitch, which last month said that Cargill's 2011 earnings were "likely to remain below" the bumper levels of 2008, said it now appeared they "may even approach" this peak, "if the second half of the year continues recent performance".

In New York, Mosaic shares closed down 4.6% at $72.67, taking their total losses since Cargill announced the spin off to 14.6%.