Thus far, at least, grain-based foods companies are not in the forefront of businesses rushing into re-financing transactions. But as the pace of such actions picks up, and even though the pressures that encourage many firms to make such moves have been absent from this part of the food industry, it seems likely that expansion will occur. After all, interest rates continue at historically low levels and re-financing provides the opportunity to extend or take on credit at favorable rates.

The availability of favorable re-financing to companies in grain-based foods is a rarity. That is definitely not the case in businesses hurt by the recession. In many instances, re-financing is undertaken in desperation in order to assure credit is there into an unknown future. Desperate moves often require sharp increases in interest rates and an array of harsher covenants. In return, maturities of loans and revolving credits have been extended for two or three years, giving companies breathing space beyond near maturity.

Even the most successful of grain-based foods companies ought to be considering the advantages of securing credit or similar funding. What is described as a massive bubble of credit entered into during 2005-07 will be maturing in another few years, with $440 billion of debt due in the 2012-14 period. This immense overhang is likely to bring about a dramatic change in credit markets and interest rates that make early actions seem particularly desirable.

This article can also be found in the digital edition of Milling and Baking News, June 30, 2009, starting on Page 4. Click