Moody's: Kellogg notes A3

Moody's Investors Service said it assigned an A3 rating to $400 million of seven-year senior unsecured notes issued by the Kellogg Co.

The outlook is stable.

The $400 million notes due May 21, 2018 have a fixed coupon of 3.25% and were priced to yield 3.29%, Moody's said.

The company has the option to redeem the notes at any time at 100% of the principal amount. The proceeds will be used primarily to repay a portion of commercial paper that was issued in April and to fund the maturity of $946 million of 6.6% senior unsecured notes that matured on April 1, the agency said.

The ratings reflect the company's strong brand equity, leading shares in ready-to-eat cereals and snacks and a proven business strategy that prioritizes sustained high levels of investment in brand support, product innovation and process improvement, Moody's said.

The ratings also consider Kellogg's recent tactical departure from this core business strategy in the cereal business that has led to earnings volatility, the agency said.

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