S&P puts Coca-Cola FEMSA on positive watch

Standard & Poor's said it placed Coca-Cola FEMSA SA de CV's BBB local and foreign currency corporate credit ratings and BBB senior unsecured debt rating on CreditWatch with positive implications following the agency's review of the 2005 year-end results, which confirmed the company's positive deleveraging three years after acquiring Panamerican Beverages Inc.

Mexico-based Coca-Cola FEMSA's business risk profile reflects its leading position in the Mexican soft drink market and the solid integration of its franchise territories throughout Latin America. S&P said its leading position is explained mainly by the strong brand recognition in the region, a wide and efficient distribution network and the company's ability to successfully implement sophisticated marketing strategies to achieve greater market growth.

These positive factors are tempered by high competition that has recently increased from companies producing low-price products, the volatility of the markets where the company operates and recent acquisitions completed through aggressive debt financing, the agency said.

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