S&P Global Ratings downgraded Mosaic Co.'s corporate credit rating and issue-level ratings to BBB- from BBB following the planned acquisition of Vale SA's fertilizer business for US$2.5 billion.
According to S&P, the deal comes at a time when fertilizer pricing has been depressed.
The firm maintained a stable outlook for Mosaic in anticipation that the miner will prioritize free cash flow generation rather than shareholder rewards and additional acquisitions.
In a separate release, S&P said the ratings and outlook on Vale will be not affected by the sale "given that our base-case assumptions incorporated US$5 billion in non-core asset divestitures in 2016 to reduce leverage."
Under the deal, expected to close in late 2017, Vale can earn an additional US$260 million over a two-year period upon achieving certain financial metrics.
The rating agency expects the miner to use the sale proceeds to reduce its nominal debt levels.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.