... Anheuser-Busch InBev NV/SA's (ABI) Long-Term Foreign-Currency Issuer Default Rating (IDR) to `BBB' in November 2016, following the completion of the acquisition of industry rival SABMiller plc (SABM) for about GBP79bn. Downgrade Rationale: The downgrade reflects a very strong post-merger operational profile that is offset by high (LBO-style) pro-forma leverage and limited prospects for debt reduction as a result of the current shareholder distribution policy. ABI has now become one of the largest and most efficient fast-moving consumer goods companies in the world, but we estimate that over 2017-2019 it will generate limited positive free cash flow (FCF) to reduce its approximately USD100bn debt burden. High Post-Merger Leverage: We calculate an annualised pro forma funds from operations (FFO)-based net leverage of close to 6.0x (lease-adjusted net debt/operating EBITDAR: 4.8x) following the merger. The current rating assumes that growing...
