DBRS Assigns Provisional Rating of A (high) to PepsiCo’s New Debt Issuance, Stable Trend

DBRS has today assigned a provisional A (high) rating with a Stable trend to PepsiCo, Inc.’s (PepsiCo or the Company) planned multi-tranche debt issue of $2.25 billion. The transaction is expected to close on or about October 26, 2010.

The three tranches are made up of:

a) $500 million, 0.875% senior notes maturing October 25, 2013;
b) $1 billion, 3.125% senior notes due November 1, 2020; and
c) $750 million, 4.875% senior notes due November 1, 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 fund the Company’s pending offer to purchase up to $500 million of its 7.90% senior notes due 2018, with the balance to be used for general corporate purposes.

The impact of these transactions is modestly negative, mainly related to higher debt levels, but not sufficient to warrant a change in PespiCo’s rating or trend.

DBRS will assign a final rating subject to DBRS having comfort that the Company’s final documentation is not significantly different from our expectations.

Note:
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.