As Fonterra increases its emphasis on its value added business Standard & Poor's have placed the New Zealand dairy cooperative on CreditWatch with a view to downgrading the company's AA- rating to A+.

Fonterra CFO Guy Cowan said that this is not unexpected, suggesting that the downgrade was the logical outcome of Fonterra's growth strategy.

"As our value added businesses - and in particular those based overseas - form an increasingly large proportion of our total business activities, this will be reflected in our rating," he said.

Standard & Poor's have indicated that Fonterra's rating is likely to change to A+ following the completion of its review
 
Despite the downgrading of the company's credit rating, Cowan remained positive. "It is equal to or better than the rating given to other large international food businesses, and remains one of the highest credit ratings of any New Zealand business," he commented.