Moody's lowers Coca-Cola Embonor

Moody's Investors Service said it downgraded the senior unsecured debt and issuer ratings of Chilean-based bottler Coca-Cola Embonor to Ba1 from Baa3 following the completion of the sale of its Peruvian operations to J.R. Lindley.

The outlook is stable.

Moody's said that the downgrade reflects the fact that, despite the significant debt repayment completed out of the proceeds of the sale, Embonor continues to face challenges in the businesses it is retaining, and that as a smaller, less diversified company, its importance in the Coca-Cola system has diminished, making it less likely that it will be a key consolidator in the Southern Cone markets.

Moody's noted Embonor's core Chilean business has experienced competitive pressure over the last several years, resulting in erosion in market share and a reduction in revenue per case. The changing competitive landscape in Chile may make it difficult to recoup market share to the previous levels.

Operating performance, while improving, is still below historical levels. In Bolivia, intense pricing pressure has also squeezed margins.

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