Moody's ups Constellation

Moody's Investors Service said it upgraded Constellation Brand's corporate family, probability of default, bank facility and senior unsecured ratings to Ba2 from Ba3.

The outlook is positive.

The upgrade reflects Constellation Brand's improved credit profile following the sale of 80 % of its U.K. and Australia businesses for about $230 million, its strong cash flow over the past year and the recent de-leveraging of its balance sheet through pre-payment of debt, the agency said.

While the divestiture of the foreign assets resulted in a smaller and less geographically diversified company, the remaining businesses will generate better margins and carry fewer pension and lease liabilities, both of which serve to improve credit metrics, the agency added.

The ratings consider Constellation's meaningful scale and good product diversification, including a broad portfolio of brands covering the premium wine, spirits and imported beer categories as well as its franchise strength, solid profitability, good liquidity profile and improving efficiency, Moody's said.

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