S&P rates Kraft Heinz notes BBB-

S&P said it assigned its BBB- ratings to Kraft Heinz Co.'s proposed €550 million senior unsecured notes due 2024 and €1.25 billion senior unsecured notes due 2028 issued by Kraft Heinz Foods Co. and guaranteed by Kraft Heinz Co.

The company expects to use proceeds to refinance a portion of its legacy Heinz Berkshire Hathaway preferred stock and for general corporate purposes.

As of April 3, the company had roughly $31.6 billion in adjusted debt outstanding, including the $8 billion of preferred stock and standard adjustments.

S&P said the ratings reflect its view that Kraft Heinz benefits from increased scale and diversity and could possibly experience industry-leading operating margins following the merger between Kraft and Heinz. The agency also factored into the rating the company's participation in a low-growth industry and its substantial leverage.

The ratings and outlook are underpinned by S&P’s 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 below 4 times in the next 12 to 18 months.

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