...Diageo plc's ratings affirmation and Stable Outlook are based on Fitch Ratings' expectation that its credit metrics will return to levels consistent with an 'A-' rating after weakening in the financial year ending June 2020 (FY20) and FY21 due to operational disruption caused by the coronavirus outbreak in 2020. We assume that Diageo will reduce leverage towards its internal target over the next two years, due to its strong ability to generate cash and its financial flexibility to manage some of its cash outflows, including shareholder remuneration. The Stable Outlook also incorporates Diageo's liquidity buffer, including GBP2.8 billion of long-term undrawn committed bank facilities, which is sufficient to survive the crisis. Nevertheless, a larger-than-expected operational shortfall caused by wide-scale lockdowns recurring in FY21 could lead us to reconsider deleveraging prospects, especially if Diageo does not take any decisive cash-preservation measures....
