Standard & Poor's Ratings Services raised its ratings on Atlanta, Ga.-based The Coca-Cola Co. (Coke), including its long-term corporate credit and senior unsecured debt ratings to 'AA-' from 'A+', as well as its short-term corporate credit and commercial paper ratings to 'A-1+' from 'A-1'. The outlook is stable.
"The upgrade reflects Coke's continued strong global operating performance and financial profile amid weak global economic conditions and following its sizable acquisition of Coca-Cola Enterprises Inc.'s North American bottling operations in 2010," said Standard & Poor's credit analyst Jean Stout.
The ratings on Coke reflect our assessment of the company's business risk profile as "excellent" and financial risk profile as "modest." Key credit factors in our business risk assessment include its very strong position as the world's largest nonalcoholic beverage company, anchored by well-known brands, as well as its geographic diversification, which we believe will continue to translate into very strong profitability and cash flow.
Our modest financial risk profile incorporates our belief that Coke's financial policies are conservative and liquidity is strong. Coke's key credit measures are near the indicative ratio ranges for a modest financial risk profile, whichincludes total debt to EBITDA in the range of 1.5x-2.0x and funds from operations (FFO) to total debt 45%-60%. The rating also incorporates a degree of implied support from Coke to some of its bottlers.
The stable outlook reflects our expectation that Coke will maintain a conservative financial policy, continue to generate significant free cash flow, and maintain credit measures that are at or near current levels.