Moody's affirms Yum! Brands

Moody's Investors Service said it affirmed the Baa2 non-guaranteed senior unsecured and Baa1 guaranteed senior unsecured debt ratings of Yum! Brands, Inc. and changed the outlook to negative from stable.

The agency said that the affirmation of the Baa2 non-guaranteed senior unsecured ratings reflects the support provided by Yum!'s meaningful-scale, brand strength and geographic and brand diversification as well as adequate debt protection metrics and good liquidity at this time.

However, Moody's said it remains concerned with what it views as the adoption of a more aggressive financial policy with sizeable share repurchases and increased dividend payouts, supported by higher debt levels and non-operating cash flows.

According to the agency, the negative outlook reflects management's adoption of a much more aggressive financial policy that continues to result in an increasingly greater dollar amount being returned to shareholders through dividends and share repurchases that are partly funded with non-operating cash flows and debt.

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