S&P rates Embotelladora Andina bonds BBB

S&P said it assigned its BBB issue-level rating to Embotelladora Andina SA’s proposed senior unsecured bonds with a 10-year maturity. The bonds will rank pari passu with all of the company’s other senior unsecured debt, and Andina is expected to use the proceeds mainly to bolster liquidity and to refinance debt, sustaining a smooth amortization schedule.

“As a result, the company’s net leverage would not increase and our forecast remains unchanged,” S&P said in a press release.

S&P rates Andina’s senior unsecured notes at the same level as the issuer credit rating because it doesn’t believe there are material financial obligations that would rank ahead of the company’s unsecured debt by way of structural or contractual subordination in a default scenario. Andina doesn’t hold any secured obligations and debt is predominantly issued at the parent level.

The ratings reflect Andina’s geographic diversification in Latin America, with a leading market share in franchised territories where the company operates, and its efficient distribution system for its extensive product portfolio with strong brand recognition. “The ratings also reflect our expectation that Andina will continue to post solid credit metrics despite volatile economies in the countries it operates, maintaining net debt to EBITDA at 1.5x-2x and discretionary cash flow to debt at 4%-8% in the next 12-24 months,” S&P said.

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