Fitch assigns BBB to Kellogg notes

Fitch Ratings said it assigned a BBB rating to Kellogg Co.’s new $1 billion aggregate three- and 10-year senior unsecured notes.

The outlook is stable.

Proceeds will be used to repay the $400 million senior unsecured notes due May 2018, fund the roughly $420 million cost to exercise the Nigeria JV option and for other general corporate purposes.

Fitch said the ratings reflect its 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 85% of total sales and a nascent natural/organic offering.

The company's portfolio strategy includes: (a) Stabilizing its core developed markets breakfast strategy; (b) growing its emerging markets business; and (c) investing for growth in its snack business.

Fitch said it expects Kellogg's cereal business growth to continue to be slightly negative, tracking industry growth but sees opportunity in the snack business as investments in crackers and wholesome snacks take hold.

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