Moody’s: Kellogg notes Baa2

Moody’s Investors Service said it assigned Baa2 ratings to a total of $1.4 billion of senior unsecured notes being offered today by Kellogg Co. in separate 10-year and 30-year tranches.

The proceeds from the offerings will be used primarily to repurchase a portion of the company’s $1.1 billion 7.45% debentures due 2031 through a tender offer launched Friday, Moody’s said.

The outlook is stable.

Kellogg’s ratings are supported by its strong brands and leading global shares in the declining, but highly-profitable ready-to-eat cereal business, Moody’s said.

The ratings also consider its modest share in the global savory snacks category, led by the Pringles business, the agency said.

The ratings also reflect an anticipation of possible further consumption declines in cereal, a category that has experienced years of gradual volume declines in developed markets, Moody’s said.

The ratings also take into account elevated costs and execution risks related to the long-dated Project K restructuring program, which are partly mitigated by anticipated cost reductions, the agency said.

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