DBRS Rates PepsiCo, Inc. $4.25 Billion Note Issue at AA (low), UR-Negative

DBRS has today assigned a rating of AA (low), which is Under Review with Negative Implications, to PepsiCo, Inc.’s (PepsiCo or the Company) multi-tranche debt issue of $4.25 billion.

The four tranches are made up of:
a) A $1.25 billion floating-rate note maturing July 15, 2011;
b) $1 billion, 3.10% senior notes due January 15, 2015;
c) $1 billion, 4.5% senior notes due January 15, 2020; and
d) $1 billion, 5.5% senior notes due January 15, 2040 (collectively, the Senior Notes).

The Senior Notes will be unsecured obligations ranking pari passu with PepsiCo’s other senior unsecured indebtedness. Proceeds are expected to be used to finance a portion of the purchase price for The Pepsi Bottling Group, Inc. and PepsiAmericas, Inc. mergers announced on April 20, 2009. The Under Review-Negative status stems from this merger announcement and is based on DBRS’s view that the transaction may result in a considerable increase in financial leverage for the consolidated entity, despite being positive from a business profile perspective. (See DBRS’s April 20, 2009 press release for additional details.) If one or both of the mergers is not completed, net proceeds will be used for general corporate purposes.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Consumer Products, which can be found on our website under Methodologies.

This is a Corporate rating.