Moody's assigns Baa2 rating to Kellogg's €500M worth of seven-year 1.75% senior unsecured notes; outlook stable

Nevin Barich

NEW YORK , May 19, 2014 (press release) – Moody's Investors Service ("Moody's") assigned a Baa2 rating to EUR$500 million of seven-year 1.750% senior unsecured notes offered today by Kellogg Company ("Kellogg"). The net proceeds from the offering will be used for general corporate purposes, including repayment of a portion of commercial paper borrowings. The rating outlook is stable.

RATINGS RATIONALE

Kellogg's Baa2 rating is supported by its strong brands and leading global shares in the declining, but highly-profitable ready-to-eat cereal business, and its small but growing shares in the savory snacks category driven by Pringles, which has generated solid growth since being acquired in 2012.

Ratings assigned:

Kellogg Company:

EUR$500 1.75% senior unsecured notes due May 24, 2021 at Baa2;

The rating outlook is stable.

Kellogg will need to stabilize the operating performance of its core cereal business in order to warrant consideration of an upgrade. Quantitatively, the company would need to restore its retained cash flow to net debt metric to at least 17% and debt to EBITDA to below 3.0 times. Conversely, Kellogg's ratings could be downgraded if the company is unable to stabilize the operating performance of its core cereal business. Quantitatively, the ratings could be lowered if the company is unable to maintain debt to EBITDA below 4.0 times.

The principal methodology used in this rating was Global Packaged Goods published in June 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Headquartered in Battle Creek, Michigan, Kellogg Company is a leading worldwide manufacturer and marketer of ready-to-eat ("RTE") cereals, savory snacks and convenience foods. The company's well-known brands include, Frosted Flakes, Pringles, Special K, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies and Kashi. For the last twelve month period ended March 29, 2014 Kellogg reported net sales of approximately $14.7 billion.

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