Food Group Nestle Long-Term Rating Lowered To 'AA-' On Change In Financial Policy; 'A-1+' Affirmed; Outlook Stable

Nestlé has announced a change in its targeted capital structure that will be carried out through a CHF20 billion share buyback to be completed by June 2020. We consider this to be a shift in financial policy that has negative credit implications. In our view, this move signals a deviation from the company's strong commitment to a solid 'AA' rating, and we expect the S&P Global Ratings-adjusted debt-to-EBITDA ratio will increase to about 2x as a result of higher debt when the share buyback plan is completed. We see this as a permanent increase in leverage. We are lowering our long-term rating on Nestlé to 'AA-' from 'AA' and affirming our 'A-1+' short-term rating. The stable outlook reflects our expectation

...+ NestlT has announced a change in its targeted capital structure that will be carried out through a CHF20 billion share buyback to be completed by June 2020. We consider this to be a shift in financial policy that has negative credit implications. + In our view, this move signals a deviation from the company's strong commitment to a solid '##' rating, and we expect the S&P Global Ratings-adjusted debt-to-EBITDA ratio will increase to about 2x as a result of higher debt when the share buyback plan is completed. We see this as a permanent increase in leverage. + We are lowering our long-term rating on NestlT to '##-' from '##' and affirming our 'A-1+' short-term rating. + The stable outlook reflects our expectation that NestlT will keep the S&P Global Ratings-adjusted leverage ratio at about 2x and that its announced strategic decisions will help the company maintain its leading position in the food industry while enhancing its ability to generate free cash flow. MILAN (S&P Global Ratings)...

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