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LONDON (Alliance News) - Moody's Investors Service on Monday affirmed Coca-Cola HBC AG's debt ratings with stable outlook following the company's announcement of a sizeable special dividend.
Moody's affirmed the Baa1 senior unsecured rating of Coca-Cola HBC Finance BV, a wholly owned subsidiary of Coca-Cola HBC. It also affirmed Coca-Cola HBC's Prime-2 short-term rating and the (P)Baa1 senior unsecured rating on its euro medium term note.
The rating follows soft drink bottler Coca-Cola HBC's decision, announced last week, to pay a special dividend of around EUR730 million, to be funded using existing liquidity and eternal debt.
In 2019, the company intends to issue new debt to partly refinance its EUR800 million bond which matures June 2020, as well as for the financing of bolt-on acquisitions, the payment of the EUR730 million special dividend, and for general business purposes.
Moody's Vice President Ernesto Bisagno said: "The affirmation of [Coca-Cola HBC's] ratings with a stable outlook reflects that, whilst the proposed special dividend combined with [mergers and acquisitions] activity will increase Moody's adjusted debt to Ebitda to 2.5 times from 1.8 times in 2018, the company has created sufficient financial flexibility in the past to keep financial metrics in line within its Baa1 rating."
"[Coca-Cola HBC's] ratings remain supported by the company's ongoing profit growth and positive free cash flow generation."
Moody's said its rationale for the rating is based on Coca-Cola HBC's "strong brand portfolio and market shares" given its position as a key bottling company for the US's Coca-Cola Co.
Other significant factors in the rating include Coca-Cola HBC's "steady profit growth and positive free cash flow generation", as well as its "balanced financial policy" which targets a leverage of 1.5 to 2.0 times in the medium term.
Moody's also said the rating receives a "one-notch rating uplift" from the "implied support" of Coca Cola.
Constrains on the rating include Coca-Cola HBC's exposure to Europe's low-growth environment and to emerging market volatility. Increased shareholder distributions and the potential for ongoing mergers and acquisitions activity also constrained the rating, Moody's said.
The stable outlook is based on Moody's belief that Coca-Cola HBC will shrink its leverage towards 2.2 times by 2020.
Shares in Coca-Cola HBC were down 1.0% at 2,73600 pence on Tuesday.
