New York, March 30, 2020 -- Moody's Investors Service, ("Moody's") today
affirmed the Baa1 senior unsecured and Prime-2 commercial paper
ratings of Anheuser-Busch InBev SA/NV (ABI) and its affiliates
and guaranteed debt, and at the same time, assigned a Baa1
rating to the company's €4.5 billion drawdown under
its EMTN program. ABI plans to utilize the net proceeds for general
corporate purposes. The rating outlook is stable.
The affirmation of the ratings reflects Moody's view that while
the company will be negatively impacted by the extraordinary effects of
the coronavirus pandemic, the company has excellent liquidity to
support temporary operating volatility. Moody's expects that
growth will resume when conditions begin to return to normal. Moody's
continues to believe that the company will be able to capitalize on its
strong market position to deleverage even if the deleveraging path will
be slowed by economic conditions in 2020. Moody's expects
that the company will act to manage through the current difficult environment
to continue to reduce debt.
ABI's gross debt to EBITDA (using Moody's adjustments) remained
high, at around 5.2x at year end 2019, or around 4.7x
proforma for the sale of the Australian business that is expected to close
in Q2. Moody's had previously said that failure to reduce
leverage to below 4.5x by year-end 2020 could result in
a downgrade, but now expects leverage will be above that level at
around 4.7x at year end. Thus, ABI will remain weakly
positioned in its rating category. Nevertheless, ABI has
large scale and geographic diversity, strong market positions and
profitability, and excellent liquidity, which will allow it
to ride out the storm. Moody's believes that the beverage
industry will be more resilient than many other sectors, although
companies with already high leverage have less flexibility to maneuver
in such an environment. Moody's will monitor the actual performance
of the company during the year, as well as any actions that management
takes, beyond the Australia sale, to facilitate deleveraging.
Assignments:
..Issuer: Anheuser-Busch InBev SA/NV
....Senior Unsecured Regular Bond/Debenture,
Assigned Baa1
Affirmations:
..Issuer: Anheuser-Busch Companies, LLC
.... Issuer Rating, Affirmed Baa1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa1
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa1
..Issuer: Anheuser-Busch InBev Finance,
Inc
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa1
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa1
....Senior Unsecured Shelf, Affirmed
(P)Baa1
..Issuer: Anheuser-Busch InBev SA/NV
.... Issuer Rating (Local Currency),
Affirmed Baa1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)P-2
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa1
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa1
..Issuer: Anheuser-Busch InBev Worldwide Inc
....Senior Unsecured Commercial Paper,
Affirmed P-2
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa1
....Senior Unsecured Shelf, Affirmed
(P)Baa1
..Issuer: CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: California Statewide Communities Dev.
Auth.
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: Cartersville (City of) GA, Development
Auth.
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: FBG Finance Pty Ltd
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa1
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa1
..Issuer: Fort Collins (City of) CO
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: Gulf Coast Waste Disposal Authority,
TX
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: JACKSONVILLE (CITY OF) FL
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: Jacksonville Economic Development Comm.,
FL
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: James City County Economic Dev. Auth.,
VA
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: New Hampshire St. Business Finance
Authority
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: New Jersey Economic Development Authority
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: OHIO (STATE OF)
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: Ohio Water Development Authority
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: Onondaga County Industrial Dev. Agy.,
NY
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
..Issuer: St. Louis Industrial Development
Auth., MO
....Senior Unsecured Revenue Bonds,
Affirmed Baa1
Outlook Actions:
..Issuer: Anheuser-Busch Companies, LLC
....Outlook, Remains Stable
..Issuer: Anheuser-Busch InBev Finance,
Inc
....Outlook, Remains Stable
..Issuer: Anheuser-Busch InBev SA/NV
....Outlook, Remains Stable
..Issuer: Anheuser-Busch InBev Worldwide Inc
....Outlook, Remains Stable
..Issuer: FBG Finance Pty Ltd
....Outlook, Remains Stable
RATINGS RATIONALE
ABI's credit profile reflects its position as the world's largest
brewer, its wide portfolio of brands at various price points,
and leading positions in some of the world's largest and most profitable
beer markets. The company has strong margins, excellent liquidity
and large, typically stable operating cash flows. The credit
profile is weakened by leverage that remains high three years after its
October 2016 acquisition of SABMiller PLC. The company's 2018 dividend
reset, along with the recent IPO of its Asian business and planned
divestiture of its Australian operating subsidiary will allow for more
rapid deleveraging going forward. The company expects to apply
substantially all of the divestiture proceeds toward debt reduction.
The credit profile reflects ABI's exposure to somewhat volatile economies,
and declining beer consumption in developed markets such as North America
and Europe. The company targets 2x net debt to EBITDA leverage
(by its definition) over the longer term. Moody's expects
2020 results to be challenged by the unprecedented effects of the coronavirus.
However, Moody's expects the company to remain committed to
its deleveraging plans and to make adjustments to sustain debt reduction.
Environmental, Social and Governance Risk
The rapid and widening spread of the coronavirus outbreak, deteriorating
global economic outlook, falling oil prices, and asset price
declines are creating a severe and extensive credit shock across many
sectors, regions and markets. The combined credit effects
of these developments are unprecedented. Moody's regards
the coronavirus outbreak as a social risk under our ESG framework,
given the substantial credit implications of public health and safety.
For more information on research on and ratings affected by the coronavirus
outbreak, please see www.moodys.com/coronavirus.
ABI's environmental impact remains low and the associated risks are limited.
The company has been very active in sustainability efforts and remains
focused on reducing its carbon footprint. Environmental considerations
are not a material factor in the rating.
ABI monitors its social risks closely, including product quality
and safety, clean labeling and messages about alcohol content and
responsible consumption. While the alcoholic beverage industry
is subject to some risk due to health concerns and the impact of drunk
driving, the industry as a whole, and ABI in particular,
have made meaningful efforts to disclose the risks and promote moderate
consumption of alcoholic beverage products.
ABI's governance is a key credit driver characterized by historically
conservative financial targets, offset by a willingness to increase
leverage to speculative grade levels for the SAB Miller acquisition.
Moody's views the company's willingness to reduce its dividend by
half to accelerate deleveraging as an important signal of its intent to
restore greater financial flexibility. The company remains committed
to reduce leverage to its publicly stated 2x leverage target and capital
allocation priorities which are, in order; investing in organic
growth, deleveraging, selective M&A and returning cash
to shareholders.
The stable outlook reflects Moody's expectations that ABI will complete
the sale of its Australian business in the coming months and use the net
proceeds for debt repayment. Moody's also assumes that the
company will explore any and all options to continue to reduce leverage
even as EBITDA is likely to come under pressure as the impact from the
virus is felt across its markets.
Factors that would lead to an upgrade or downgrade of the ratings:
To achieve an upgrade, ABI would need to grow earnings and cash
flow, and sustain strong profit margins. It would also need
to reduce debt to EBITDA leverage to under 4x and improve retained cash
flow as a percent of net debt to over 10% (including Moody's adjustments).
The ratings could be downgraded if ABI encounters operational difficulties
or if profitability falls. Moody's has previously said that
ratings could also be downgraded if debt to EBITDA leverage is not reduced
to 4.5x or below by the end of calendar 2020 (including Moody's
adjustments). In the wake of the corona virus pandemic, Moody's
would tolerate a delay in achieving the 2020 target assuming that the
company takes meaningful measures to mitigate operating softness and ensure
ongoing progress towards debt reduction and deleveraging. Large
shareholder returns or debt funded acquisitions before the company has
materially reduced leverage could also lead to a downgrade.
The principal methodology used in these ratings was Alcoholic Beverages
Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1212834.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Anheuser-Busch InBev SA/NV, incorporated in Leuven,
Belgium, is the world's largest brewing company. ABI has
operations in 50 countries worldwide with market leading positions in
North America, Brazil, Mexico, South Africa, Australia
and a leadership position in premium beer in China. In Brazil,
it operates through its subsidiary Companhia de Bebidas das Americas ("AmBev")
(rated Baa3, stable). Annual revenues are approximately $56
billion.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
At least one ESG consideration was material to the credit rating outcome
announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Linda Montag
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
John E. Puchalla, CFA
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
