Moody’s drops Kraft, debt to Baa3

Moody's Investors Service said it downgraded the long-term issuer rating and senior unsecured debt rating of Kraft Foods Group, Inc. to Baa3 from Baa2 and withdrew the Prime-2 commercial paper rating.

This action follows the approval by Kraft shareholders of the pending merger of Kraft into H.J. Heinz Co. to form Kraft Heinz Foods Co.

The action also concludes the rating review for downgrade that began on March 25 following the announced merger agreement between Heinz and Kraft.

Upon consummation of the merger, Kraft will cease to exist and its long-term issuer rating will be withdrawn. All existing debt instruments of Kraft will become direct obligations of or will be guaranteed by the surviving Kraft-Heinz Foods operating company. These obligations will also be guaranteed by the public reporting parent company H.J. Heinz Holding Corp. to be renamed Kraft Heinz Co.

Kraft's senior unsecured debt will rank equally with all senior unsecured debt of Kraft Heinz Foods and subsidiaries ($1 billion of debt issued at a Canadian subsidiary will be guaranteed by Kraft-Heinz).

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