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Investing.com -- S&P Global Ratings has assigned a ’BBB’ issue rating to the proposed senior unsecured notes of The Kraft Heinz (NASDAQ:KHC) Co., a U.S.-based company. The final amounts and maturities of these notes are yet to be determined. Kraft Heinz Foods Co., a subsidiary of the parent company, will issue these proposed U.S. dollar-denominated notes, which will be guaranteed by Kraft Heinz Co.
The proceeds from this leverage-neutral offering are expected to be used for general corporate purposes, including debt repayment. The ratings are based on the assumption that the proposed transaction will close substantially on the terms presented to S&P Global Ratings.
Existing ratings on Kraft Heinz, including the ’BBB’ issuer credit rating, remain unchanged. The company has a stable outlook, despite continuing to operate in a challenging environment and an overstretched consumer market.
In the fiscal year 2024, which ended on December 28, Kraft Heinz experienced an organic sales decline of about 2%. This was due to a volume decrease of 3.5%, partially offset by a pricing growth of approximately 1.5%. Despite this, the company was able to expand its EBITDA through pricing and productivity gains, resulting in an improvement to S&P Global Ratings-adjusted leverage to slightly below 3x, compared to 3.2x in the previous year.
The company is expected to continue experiencing softness in 2025. However, it is anticipated to maintain a good cushion to the 4x leverage downgrade trigger and uphold consistent financial policies, including its company-defined 3x net leverage target. Kraft Heinz is also expected to continue its portfolio reshaping strategy and may consider selling off its lower growth assets that are more exposed to private-label and commodity pressure.
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