S&P, Moody's may cut Anheuser-Busch rating
NEW YORK (Reuters) - All three major rating agencies on Thursday said they may cut their ratings on Anheuser-Busch (BUD.N) after InBev INTB.BR on Wednesday made an unsolicited $46.3 billion bid for the largest U.S. brewer.
If Anheuser accepts the $65 per share offer, Budweiser would be added to InBev's Stella Artois and Beck's beer brands to create the world's largest brewer.
"We believe that if the transaction proceeds, and includes a significant amount of debt financing as indicated by InBev, credit measures will weaken well below Anheuser-Busch's current levels," Standard & Poor's said in a statement.
S&P and Fitch Ratings both rate Anheuser "A," and Moody's Investors Service rates the company "A2," all the sixth-highest investment grade.
"While it is unclear if the bid will go through and it could take some time for more certainty to develop, there are several ways in which the bid could pressure ratings," Moody's said in a statement.
It would be negative for Anheuser's ratings if InBev incurs substantial leverage to make the deal happen and is itself less creditworthy than Anheuser, or if it levers up the U.S. company to use the U.S. cash flows to repay the debt, Moody's said.
At the same time, it is possible Anheuser will take actions to fend off a bid that would hurt its ratings, Moody's added.
Only some of Anheuser's bonds have change-of-control triggers that protect against a purchase that sends the ratings below investment grade, Fitch added.
The company's bondholders reacted negatively to the news, with spreads on Anheuser's 5.5 percent bond due 2018 widening 18 basis points to 2.04 percentage points over U.S. Treasuries, according to MarketAxess.
(Reporting by Karen Brettell; Editing by Leslie Adler)
