S&P downgrades Corteva rating on seed business spin-off
S&P downgrades Corteva rating on seed business spin-off
S&P Global Ratings downgraded Corteva Inc. (NYSE:CTVA) to ’BBB+’ from ’A-’ on Thursday and removed the company from CreditWatch negative as its spin-off of seed business Vylor Inc. nears completion on Oct. 1, 2026. The rating agency also lowered issue-level ratings on senior unsecured notes to ’BBB+’ from ’A-’ and on preferred stock to ’BBB-’ from ’BBB’, while the short-term rating remains ’A-2’. S&P assigned a ’BBB+’ rating to Corteva’s new unsecured notes.
The downgrade reflects the spin-off of the higher-margin seeds business, which reduces scale and diversification. Corteva’s 2025 crop protection revenues were $7.5 billion, representing 43% of pre-separation revenue, and EBITDA was $1.35 billion, or 34% of pre-separation EBITDA. Pro forma for the separation, Corteva becomes the fourth largest crop protection company globally.
On Sept. 15, 2026, Corteva hosted an investor day where management discussed capital allocation priorities and financial policies. S&P believes the company will maintain debt to EBITDA not above 2.0x by the company’s calculation. Management targets generating $2.2 billion to $2.6 billion of cash flow from operations in 2027-2029, with about 55% used for mergers and acquisitions and share repurchases, about 20% for dividends, and about 25% for sustaining capital expenditure.
The pro forma business remains geographically diverse, with 36% of revenue from North America, 31% from Latin America, 21% from Europe, the Middle East, and Africa, and 12% from Asia-Pacific. Product diversification includes 49% herbicides, 23% insecticides, 15% fungicides, and 6% biologicals. Corteva targets about $800 million in revenue growth from new products by 2027 and $1 billion in biological revenues by the end of the decade.
The stable outlook reflects S&P’s expectation that Corteva will maintain weighted-average funds from operations to total debt at the stronger end of the 45% to 60% range based on year-end results. In June and July 2026, Corteva made pension and other postemployment benefits contributions of about $1.5 billion total to help de-risk the plans. Legacy PFAS, crop protection product, and underfunded pension liabilities remain with Corteva.