House & Home
Thu, March 5, 2009Wed, March 4, 2009Tue, March 3, 2009Mon, March 2, 2009Fri, February 27, 2009Thu, February 26, 2009Wed, February 25, 2009Tue, February 24, 2009Fitch Rates PepsiCo's $1.0B 3.75% 5-Year Notes Offering 'AA-'; Outlook Stable
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Published in House and Home on Thursday, February 26th 2009 at 11:13 GMT, Last Modified on 2009-02-26 11:14:27 by Market Wire🞛 This publication is a summary or evaluation of another publication
CHICAGO--([ BUSINESS WIRE ])--Fitch Ratings has assigned an 'AA-' rating to PepsiCo, Inc.'s (NYSE:PEP) $1.0 billion 3.75% senior unsecured notes due March 1, 2014. The notes rank pari passu with PepsiCo's other senior unsecured debt. PepsiCo plans to use the proceeds for general corporate purposes. The notes are being issued under the company's existing indenture dated May 21, 2007. Significant covenants include limitations on secured debt. PepsiCo is not bound by any financial covenants.
At Dec. 27, 2008, PepsiCo's total debt was approximately $8.2 billion, of which $369 million was short-term. Fitch's ratings for PepsiCo are as follows:
--Long-term Issuer Default Rating (IDR) 'AA-';
--Bank credit facility 'AA-';
--Senior unsecured debt 'AA-';
--Short-term IDR 'F1+';
--Commercial paper 'F1+';
The Ratings Outlook is Stable.
For the year ended Dec. 27, 2008, PepsiCo's credit statistics were in line with Fitch's expectations. Total debt-to-operating earnings before interest, taxes, depreciation and amortization (EBITDA) was 0.9 times (x) and operating EBITDA-to-gross interest expense was 26.3x. Funds from operations (FFO) fixed charge coverage was 11.3x and operating EBIT margin was 17.3%. The company's operating margin drives its ability to generate considerable free cash flow. PepsiCo has produced on average over $2.2 billion in free cash flow annually over the past five years. The company's ratings are reflective of the credit metrics of the Pepsi system, which comprises PepsiCo (see ratings above) and its significant, strategic bottlers, The Pepsi Bottling Group, Inc. (IDR: 'A+') and PepsiAmericas, Inc. (IDR: 'A').
For further information, please review Fitch's press release, 'Fitch 2009 U.S. Beverage Outlook: Volumes Likely to Remain Challenged in 2009,' dated Nov. 18, 2008 and Fitch's research report, 'Credit Update: PepsiCo, Inc.,' dated Jan. 29, 2009.
Fitch's ratings on PepsiCo were initiated as a service to the users of its ratings. PepsiCo's ratings are based on public information.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, [ www.fitchratings.com ]. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.