Credit rating agency Fitch has given more details on why it downgraded the rating of dairy giant Fonterra in late October, from AA- to A.
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In a more detailed report, it said Fonterra's failure to reduce its advance payout to farmers, and its interest-free loan scheme to cash-strapped suppliers, were two key factors in the downgrade.
At the time, Fitch said volatility in global milk prices and Fonterra's weakened business outlook were behind the [ double-notch downgrade].
The downgrade, along with a cut by Standard & Poor's, means it is more expensive for Fonterra to borrow.
Fonterra will give an update tomorrow on its forecast payout of $4.60 a kilo of milk solids for the coming season, and whether it will continue the interest-free loans scheme, which has cost it about $390 million.