S&P assigns A to Starbucks notes

S&P said it assigned an A issue-level rating to Starbucks Corp.'s proposed ¥85 billion ($750 million equivalent) senior unsecured notes due 2024 to be issued under its shelf registration statement filed Sept. 15, 2016.

Proceeds will be used for sustainability projects such as coffee purchases from suppliers verified as complying with Starbucks' ethical sourcing program as well as the development and operation of farmer support centers in coffee growing regions.

Pro forma for the proposed debt, adjusted debt to EBITDA will increase slightly to 1.4 times but S&P expects deleveraging to occur from EBITDA growth.

The agency said it does not expect the company to issue additional debt until leverage improves – dipping to the low-1 times area.

Starbucks' performance trends are solid, with persistent good same-store sales and profit gains as it promotes a sound cadence of new store openings to broaden its geographic footprint, both in the U.S. and in international markets, S&P explained.

© 2015 Prospect News.
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