S&P upgrades Coca-Cola Femsa

Standard & Poor's said it raised Mexico-based Coca-Cola Femsa SA de CV's long-term corporate credit rating to BBB+ from BBB and removed it from CreditWatch positive, where it was placed on March 22. S&P also raised the long-term national scale corporate credit rating to mxAAA from mxAA+. The outlook is stable.

S&P said the rating action reflects the company's strong business fundamentals, as well as the company's positive deleveraging three years after acquiring Panamerican Beverages Inc. In addition, the upgrade reflects the agency's expectations that the company will continue to improve its financial profile through robust cash-flow generation in its core markets and an adequately designed debt repayment program. During 2005, Coca-Cola Femsa reduced its outstanding debt by $358 million, or 16% of 2004 total debt outstanding, and total debt to EBITDA fell to 1.8x at the end of 2005.

These factors are partially offset by high competition that has recently increased from companies producing low-price products, the volatility of the markets where the company operates and foreign currency exposure related to its dollar-denominated debt, the agency said.

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