This special report is the second edition of a comprehensive review of leveraged food, beverage, restaurant, and consumer products companies. The report contains the profiles of 20 high-yield issuers with an aggregate of nearly $60 billion of total debt. Fitch Ratings has public ratings on nine of these firms, while the remainder are not publicly rated (NPR). Each profile includes Fitch’s assessment of the key credit strengths and weaknesses, as well as key selected financial data, a debt organizational chart and covenant analyses.
Excerpt from the Report
“The flurry of corporate actions has been enabled by low financing costs and an improved equity market. The aim of many of these transactions, such as LBOs, has been to unlock or create shareholder value frequently resulting in increased leverage. This, in turn, has driven bondholders and other fixed-income investors to reposition their portfolios or adopt more defensive investment strategies. IPOs have increased financial flexibility and fostered debt reduction. Acquisitions have been opportunistic, improving the competitiveness and diversification of firms discussed in this report. Lastly, for firms that have engaged in divestitures the associated debt reduction has been substantial and effective at reducing their financial risk. However, to the extent that the divestitures were of stable, higher-margin operations, and the remaining businesses’ operating earnings exhibited volatility, these firms have also increased business risk. Fitch has factored the dynamics of all of these corporate actions into credit ratings with numerous upgrades or downgrades occurring across much of its portfolio.
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