S&P downgrades PepsiCo

Standard & Poor's said it lowered the corporate credit rating on PepsiCo Inc. to A from A+ and its senior unsecured debt ratings to A- from A+, and removed the ratings from CreditWatch negative, where they were placed on Feb. 25.

The A long-term corporate credit and senior unsecured debt ratings on Pepsi Bottling Group Inc. and PepsiAmericas Inc. were affirmed.

The outlook is stable.

"The rating actions, including PepsiCo's downgrade, reflect our expectation that PepsiCo's credit measures will remain below our prior expectations in the intermediate term primarily due to the company's expected active and largely debt-financed, share repurchase program," S&P analyst Jean C. Stout said in a statement.

PepsiCo's combined credit measures, pro forma for the acquisitions and licensing fee payment to Dr Pepper Snapple Group Inc., are weak, with a debt-to-EBITDA ratio of almost 2x.

Ratings reflect the company's balanced portfolio of businesses, with its strong positions and well-known brands in the relatively stable, cash-generating soft drink industry and snack food industries, and geographic diversification, the agency said.

These strengths are partially offset by the company's somewhat more aggressive financial policies, the agency noted.

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