Moody’s gives Baa2 to Kellogg notes

Moody's Investors Service said it assigned a Baa2 rating to €600 million of 0.8% five-year senior unsecured notes offered by Kellogg Co.

Net proceeds will be used primarily to repay $400 million of 1.75% notes that mature on May 17, 2017 and to reduce commercial paper borrowings.

The outlook is stable.

Moody’s said the ratings are supported by Kellogg's strong brands and leading global shares in the declining, but highly-profitable, ready-to-eat (RTE) cereal business, and its growing but still modest share in the global snacks category led by Pringles.

The ratings also reflect high execution risk – especially related to the company's recently announced plan to exit its direct-to store delivery (DSD) network – and high financial leverage that leaves little cushion in the company's Baa2/Prime-2/ ratings and stable outlook, the agency added.

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