S&P: Kraft Heinz notes BBB-

S&P said it assigned BBB- ratings to the Kraft Heinz Co.’s proposed senior unsecured notes consisting of seven-, 10- and 30–year tranches.

The notes will be issued by Kraft Heinz Foods Co. and guaranteed by Kraft Heinz, S&P said.

The proceeds will be used to refinance a portion of the company’s legacy Heinz Berkshire Hathaway preferred stock and for general corporate purposes, the agency said.

The company benefits from increased scale and diversity, S&P said, and could possibly experience industry-leading operating margins following the merger between Kraft and Heinz.

The ratings also consider the company’s participation in a low-growth industry and its substantial leverage, S&P said.

The ratings and outlook are underpinned by an expectation that Kraft Heinz will execute on its cost savings program and maintain a financial policy consistent with an investment-grade rating, including maintaining leverage to less than 4x in the next 12- to 18-months, the agency said.

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