Fitch applies BBB to Kellogg notes

Fitch Ratings said it assigned a BBB rating to Kellogg Co.’s €600 million senior unsecured notes due November 2022.

Proceeds will be used to refinance the $400 million senior unsecured notes due May 2017 and repay a portion of outstanding commercial paper borrowing.

“Kellogg's ratings reflect Fitch's expectations that organic volume will remain modestly negative over the medium-term given the Kellogg portfolio's exposure to mature developed markets that account for about 87% of total sales and a nascent natural/organic offering,” Fitch said in a news release.

“Revenue declined an average of 4% over the past three years. Currency translation was responsible for most of the decline, followed by volume, which declined approximately 1%/year.

“Offsetting this weakness, price/mix has been positive for each of the past three years. These positive price/mix results were driven by a mix shift towards higher-growth categories and Kellogg's efforts to expand its gross margin,” the agency added in the release.

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