Standard & Poor's assigns BBB+ senior unsecured debt rating to H.J. Heinz's US$300M of 1.50% notes due 2017, US$300M of 2.85% notes due 2022

NEW YORK , February 29, 2012 (press release) – Standard & Poor's Ratings Services today assigned its 'BBB+' senior unsecured debt rating to Pittsburgh, Pa.-based H.J. Heinz Co.'s $300 million of 1.50% notes due 2017 and $300 million of 2.85% notes due 2022.The notes will be issued under the company's Form S-3 shelf registration for debt securities.

Heinz has indicated that net proceeds from this debt issuance will be used for general corporate purposes, including repayment of commercial paper. Heinz had about $5.0 billion of debt as of Jan. 25, 2012. Although these new notes will add an additional layer of long-term, fixed-rate debt to Heinz's capital structure, we expect the company's $600 million of notes that mature in March 2012 will be repaid.

Our 'BBB+' corporate credit rating on Heinz reflects our view that the company's business risk profile is "strong" and its financial risk profile is "intermediate", as defined in our criteria. Key credit factors in our assessment of Heinz's business profile include the company's exposure to volatile commodity input costs and the highly competitive nature of the packaged foods market. We believe the company benefits from its strong portfolio of branded products with solid market positions, extensive geographic diversity, and a history of relatively stable operating margins.

Heinz's leverage remains in or near the range of indicative ratios for an "intermediate" financial risk profile, which includes adjusted leverage in a range of 2x to 3x and funds from operations (FFO) to debt of 30%-45%. We estimate that for the 12 months ended Jan. 25, 2012, the ratio of lease- and pension-adjusted total debt to EBITDA was about 2.6x, and FFO to total debt was more than 27%, the latter of which is slightly below the indicative ratio range for the intermediate profile. We estimate Heinz will sustain credit measures near these levels and that the company will maintain a prudent financial policy. For the full corporate credit rating rationale, see Standard & Poor's research report on Heinz published on Feb. 27, 2012, on RatingsDirect.

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