The Coca-Cola Co. Downgraded To 'AA-' On Less Leverage Reduction From Bottler Divestitures; Outlook Stable

The Coca-Cola Co. (Coke) recently announced its intentions to expedite its bottler refranchising, and expects to divest its bottling operations by the end of 2017. Based on our revised forecast to account for this refranchising update, we do not believe the U.S.-based company will reduce leverage sufficiently to maintain our 'AA' corporate credit rating, despite improved cash flow ratios from debt repayment. We are lowering the long-term ratings on Coke, including the corporate credit rating to 'AA-', and are affirming our 'A-1+' short-term and commercial paper ratings. The outlook is stable, reflecting our belief that the company will maintain fairly stable operating income as it divests its bottling operations, reduces debt, and improves its ratio of debt to EBITDA to

...+ The Coca-Cola Co. (Coke) recently announced its intentions to expedite its bottler refranchising, and expects to divest its bottling operations by the end of 2017. + Based on our revised forecast to account for this refranchising update, we do not believe the U.S.-based company will reduce leverage sufficiently to maintain our '##' corporate credit rating, despite improved cash flow ratios from debt repayment. + We are lowering the long-term ratings on Coke, including the corporate credit rating to '##-', and are affirming our 'A-1+' short-term and commercial paper ratings. + The outlook is stable, reflecting our belief that the company will maintain fairly stable operating income as it divests its bottling operations, reduces debt, and improves its ratio of debt to EBITDA to closer to 2x over the next two years. NEW YORK (Standard & Poor's) Feb. 25, 2016--Standard & Poor's Ratings Services today lowered all of its long-term ratings on Atlanta-based The Coca-Cola Co., including the corporate...

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