TEXT-S&P rates PepsiCo's notes 'A-'

Tue Oct 23, 2012 3:01pm EDT

Oct 23 - Standard & Poor's Ratings Services today assigned its 'A-' senior
unsecured debt rating to Purchase, N.Y.-based PepsiCo Inc.'s 
(A/Stable/A-1) proposed GBP500 million senior unsecured notes due 2022. PepsiCo
will issue the notes under the company's Rule 415 shelf registration. Our rating
on PepsiCo's senior unsecured debt, which is at the holding company, reflects
our opinion that this debt is structurally subordinated to priority obligations
at its operating entities, which generate substantially all of its cash flow and
account for a significant portion of total assets but which do not guarantee
this debt. PepsiCo has indicated that it plans to use the net proceeds from this
offering for general corporate purposes, including the repayment of commercial
paper. 

The corporate credit rating on PepsiCo continues to reflect our assessment of 
the company's business risk profile as "excellent" and financial risk profile 
as "intermediate." Key credit factors in our business risk assessment include 
the company's balanced portfolio of businesses, with its strong positions and 
well-known brands in the relatively stable, cash-generating liquid refreshment 
beverage and snack food industries, and geographic diversification. Our 
financial risk profile incorporates our belief that PepsiCo's financial 
policies are aggressive, including its active share repurchase and acquisition 
program, which have led to higher debt levels. We expect key credit measures 
to be on the weak end of the indicative ratios for an intermediate financial 
risk profile, which include leverage, as measured by total debt to EBITDA, of 
2x-3x, and funds from operations to total debt of 30%-45%.

RELATED CRITERIA AND RESEARCH
     -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012
     -- 2008 Corporate Criteria: Rating Each Issue, April 15, 2008

RATINGS LIST
PepsiCo Inc.
 Corporate credit rating                A/Stable/A-1

Rating Assigned
PepsiCo Inc.
 Senior unsecured
 GBP500 mil. notes due 2022               A-


Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
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column.

Primary Credit Analyst: Jean C Stout, New York (1) 212-438-7865;
                        jean_stout@standardandpoors.com
Secondary Contact: Chris Johnson, CFA, New York (1) 212-438-1433;
                   chris_johnson@standardandpoors.com


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 Transmission history : 1 alert filed
 
 Time            USN    User    Headline
 23/10/2012      WNA82  WE      S&P RATES PEPSICO'S GBP500M SR UNSECD
 14:58:03        1      SCRIPT  NOTES 'A-'
 NORMAL RATINGS PepsiCo Inc PEP PEP.MX S&P Rates PepsiCo's GBP500M Sr Unsecd
Notes 'A-' PepsiCo Inc PepsiCo PEP.N USD 105836000000 0.55658 INDEX .15GSPC S&P
1500 INDEX .DJGTE Dow Jones Global Titans 50 INDEX .GSPC S&P 500 INDEX .OEXA S&P
100 US FMA E U SODA US SODA BEV FOD CMPNY yes