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