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TEXT-S&P rates PepsiCo proposed notes 'A-'
August 8, 2012 / 8:15 PM / 5 years ago

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

Aug 8 - 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 senior unsecured notes consisting of a three-year,
five-year, and 10-year fixed-rate tranches (actual amounts and maturity dates to
be finalized at the close of the transaction). 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 
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 reflects our assessment of the 
company's business risk profile as "excellent" and financial risk profile as 
"intermediate" (as defined in our criteria). Key credit factors considered in 
our business risk assessment include PepsiCo's geographic diversification and 
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. 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. We expect 
key credit measures will remain 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
     -- Key Credit Factors: Criteria For Rating The Global Branded Nondurable 
Consumer Products Industry, April 28, 2011
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 
May 27, 2009


RATINGS LIST

PepsiCo Inc.
 Corporate Credit Rating                 A/Stable/A-1

New Rating

PepsiCo Inc.
 sr unsecd notes due 2015, 2017, 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 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.

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