Moody’s drops Yum notes to Ba1, rates CFR Ba1

Moody's Investors Service said it downgraded Yum! Brands, Inc.'s senior unsecured notes to Ba1 from Baa3.

The Baa2 guaranteed senior unsecured bank rating remains unchanged.

In addition, the agency assigned Yum a Ba1 corporate family rating and Ba1-PD probability of default rating.

All ratings are on review for downgrade.

Moody’s said the downgrade and continuing review for downgrade was prompted by Yum's announcement that it is committed to returning substantial capital to shareholders in conjunction with the separation of its Yum China Division that will occur as the company transitions to a non-investment grade credit rating with a balance sheet more consistent with highly leveraged peer restaurant franchise companies. Yum expects to separate Yum China into an independent publicly traded company through a tax-free distribution to shareholders.

The agency said it views these initiatives as the adoption of a significantly more aggressive financial policy that is expected to result in a highly leveraged capital structure and limit its financial flexibility.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.