Supply shocks drove cocoa prices higher in 2024, as changing rainfall patterns and crop disease cut yields by 25% in Ivory Coast, the world's largest producer. Rainfall changes linked to Congo Basin deforestation challenge smallholder producers, and continued forest clearance in West Africa and the strong El Niño anticipated for 2026 could renew pressure on bean prices and credit metrics.
Ahead of likely refinancing next year, with EUR741mn of BARY’s EUR3,088mn in outstanding bonds maturing in early 2028, we analyse how these external threats can affect end markets and the potential for mitigating actions.
Nature loss
Could deforestation trigger a rating downgrade for Barry Callebaut?
Download full paper (0.2mb)Barry Callebaut (BARY), a global producer of chocolate and cocoa products, is rated Baa3 Neg/BBB- Neg, so any downgrade would be to a sub-investment grade rating. Recent volatility in cocoa prices has shrunk BARY's EBITDA margin from 10.7% to 6.1% over 2022 - 2025, while leverage has surged from 1.4x to 4.7x.
In this paper, we consider impacts of climate change-related deforestation on BARY's financial performance, the implications for its debt investors and the possibility of a ratings downgrade.
