Moody's rates Starbucks notes Baa1

Moody's Investors Service said it assigned a Baa1 rating to Starbucks Corp.'s proposed three-year and five-year senior note offerings aggregating $750 million in total. The outlook is positive.

Proceeds from the proposed notes will be used to fund a portion of the recent arbitration award to Kraft Foods Global, Inc. and for general corporate purposes.

The agency said the Baa1 rating reflects Starbucks global brand strength, dominant position in the U.S. specialty coffee segment, global diversification, meaningful scale, solid credit metrics and very good liquidity.

The ratings also reflect the negative impact that soft consumer spending and heightened competition could have on consumer visits, operating performance and debt protection measures if overall consumer spending remains soft for a prolonged period, Moody's said, adding that the ratings also consider the limited scope and concept concentration that is focused on a single product, coffee.

The positive outlook reflects Moody's view that greater customer focus, new product offerings and a reasonable level of new restaurant growth both in the United States and internationally should continue to strengthen the Starbucks brand and drive further improvement in earnings, cash flows and debt protection metrics.

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