Fitch rates PepsiCo notes A

Fitch Ratings said it assigned an A rating to PepsiCo, Inc.'s $4.5 billion multi-tranche offering.

The outlook is stable.

The proceeds will be used for general corporate purposes, including the potential redemption of all or a portion of the $1.5 billion 7.90% senior notes due Nov. 1, 2018 issued by PepsiCo and the $750 million 5.125% senior notes due Jan. 15, 2019 issued by Bottling Group, LLC in accordance with the make-whole redemption provisions.

PepsiCo had about $35.6 billion of total debt, including $2.9 billion of commercial paper as of third quarter 2016, Fitch said.

The notes will be issued by PepsiCo under the indenture dated May 21, 2007 and will rank equally with PepsiCo's senior unsecured obligations, the agency said.

The ratings reflect the company’s considerable financial flexibility, substantial cash flow, significant scale, geographic reach, product diversification and brand strength as the world's second largest food and beverage company, Fitch explained.

Rating concerns include the increased leverage, which has been driven by past debt funding for shareholder initiatives combined with foreign-exchange headwinds, the agency said.

But Fitch said it expects net supplemental leverage to remain within the mid-2.5x range going forward, which is acceptable for the current ratings.

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