Moody's ups Coca-Cola Femsa

Moody's Investors Service said it upgraded to A2 from A3 the senior unsecured rating of Coca-Cola Femsa, SAB de CV and affirmed the Aaa.mx national scale rating.

The outlook is stable.

The upgrade reflects expectation that the company will further strengthen its market position in Mexico after the merger with Grupo Tampico's beverage division, the likelihood that any future mergers or acquisitions will not be conducted at the detriment of the company's strong financial profile and the fact that the company has been able to maintain its strong credit metrics and healthy liquidity over the last 18 months, according to the agency.

"The A2/Aaa.mx ratings of Coca-Cola Femsa are supported by the company's position as the largest Coca-Cola bottler in Latin America, with leading market share and significant distribution infrastructure in its franchise territories, strong profitability, sustained strong free cash flow generation and healthy historical credit metrics," Alonso Sanchez Rosario, a Moody's assistant vice president, said in a statement.

Ratings also reflect Coca-Cola Femsa's strategic importance to the overall Coca-Cola system, the agency noted.

Challenges include the potential volatility and country risks inherent in some of the company's South American markets, intense competition across franchise territories as well as currency and commodity exposures in its cost structure, the agency said.

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