S&P may lower Kraft

Standard & Poor's said it placed Kraft Foods Inc.'s A corporate credit rating and A-1 commercial paper rating on CreditWatch with negative implications. A downgrade is likely to be limited to one notch.

The watch follows Kraft's third-quarter earnings results with weaker-than-expected credit measures from higher commodity costs and Kraft's more aggressive share buybacks, the agency said.

The company's adjusted total debt-to-EBITDA ratio grew to about 2.4 times for the 12 months ended Sept. 30, from 2 times at fiscal year-end 2006. Pro forma for the pending largely debt-financed Danone acquisition, S&P estimates leverage at about 3.2 times.

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