Fitch ups Coca-Cola Femsa

Fitch Ratings said it upgraded the foreign and local currency rating of Coca-Cola Femsa SA de CV to A- from BBB+.

Fitch also upgraded the foreign currency rating of subsidiary Corporacion Interamericana de Bebidas SA de CV to A- from BBB+ and affirmed the AAA(mex) national scale rating of Coca-Cola Femsa's outstanding peso-denominated debt.

The outlook is stable.

The upgrades reflect the progress Coca-Cola Femsa has made in reducing debt since acquiring Panamco in 2003, improved macroeconomic environment in its key markets of Mexico, Brazil, Colombia and Argentina, improvements to the company's business model in Brazil and the successful response by the company to the arrival of Big Cola in the Mexican market, the agency said

Coca-Cola Femsa's international credit ratings are higher than the BBB country ceiling rating for Mexico due to the explicit and implicit financial support it receives from The Coca-Cola Co.

However, The Coca-Cola Co. has notified its bottlers in Mexico and Brazil of its intention to increase the price of concentrate beginning in 2007, which Fitch estimated will cost Coca-Cola Femsa about $21 million in 2007, $42 million in 2008, and $64 million in 2009 and thereafter.

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