(The following statement was released by the rating agency)
Oct 2 - Standard & Poor's Ratings Services said today that its ratings on Kraft Foods Group Inc.
(KFG), including its 'BBB' corporate credit rating and 'A-2' short-term corporate credit and commercial paper ratings, remain unchanged following Mondelez International Inc.'s
(BBB/Stable/A-2) spin-off of KFG effective Oct. 1, 2012.
The ratings on KFG reflect our assessment of the company's business risk profile as "strong" and financial risk profile as "significant." Key credit factors in our business risk assessment include the company's well-recognized brands and product diversification within the mature and low-growth packaged food markets of North America; and its narrow geographic focus and exposure to volatile commodity input costs. Our view of the company's financial risk profile reflects financial policies we consider aggressive, including an expected very high dividend payout rate, adequate liquidity, and key credit measures that are currently weak relative to indicative ratios for a significant financial risk profile (which include leverage, as measured by debt to EBITDA, of 3x-4x and funds from operations to debt of 20%-30%). The outlook remains negative. We could lower the ratings if the company's leverage fails to decline to less than 4x and funds from operations to total debt remains below 20% within the next 12 to 15 months. We estimate approximately $10 billion of reported debt is outstanding at KFG following the transaction.
(New York Ratings Team)