Moody's keeps PepsiCo on review

Moody's Investors Service said it assigned an Aa2 rating to PepsiCo Inc.'s refinancing of its upsized 364-day revolver and placed the rating on review for possible downgrade, where the company's Aa2 long-term ratings were placed in April.

The agency said the early replacement of the revolver that had been due to expire in December 2009 improves PepsiCo's liquidity not only because it was upsized to $1.98 billion from $1.80 billion but also because it contains a term-out option that would allow the company to draw on the facility at the end of the term if necessary.

Moody's placed the ratings on review following PepsiCo's unsolicited bid for the non-PepsiCo-owned shares of its two largest bottlers. The bottlers have subsequently rejected the bid as inadequate, and future developments remain to be seen.

The agency said the review will consider the combined strength of the Pepsi System on a fully consolidated basis including additional debt depending on the final terms of any agreement reached.

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