Sao Paulo, December 11, 2015 -- Moody's América Latina has today placed the A3/Aaa.br ratings
of the BRL 1.0 billion senior debentures due 2021 issued by Ambev
S.A. on review for downgrade. The rating action follows
Moody's rating action on December 9, 2015 that placed Brazil's Baa3
issuer and bond ratings on review for downgrade.
Ratings placed on review for downgrade:
Issuer: Ambev S.A.
- BRL 1.0 billion senior unsecured debentures due 2021:
A3/Aaa.br
The ratings are on review for downgrade.
RATINGS RATIONALE
The review process of Ambev's ratings was prompted by the action
that placed Brazil's sovereign Baa3 issuer and bond ratings on review
for downgrade. The review process will focus on the result of Brazil's
government bond rating review and on Ambev's links with Brazil's
macroeconomic environment.
Ambev is rated above Brazil's sovereign rating and above the country's
foreign currency ceiling for bonds and notes of Baa2, which is granted
only under exceptional circumstances when an issuer's fundamentals are
stronger than those of the sovereign. In the case of Ambev this
is evidenced by its exceptionally strong credit metrics, ample liquidity,
limited reliance on the local banking system for funding and meaningful
cash generation outside Brazil, which is sufficient to service the
company's foreign currency debt. These factors outweigh Ambev's
links with the Brazilian economy. Nonetheless, with 59%
of the revenues dependent on Brazil and the deteriorating economic and
political environment, Ambev's ratings could be affected by
a sharp deterioration of domestic fundamentals.
Ambev's ratings are supported by its scale as one of the world's largest
brewers, its leading position in large markets, such as Brazil
and Canada, its geographic diversification and a cost-competitive
own distribution network. In Brazil, its dominant position
and execution capabilities will allow it to advance in terms of market
share in a more challenging macroeconomic scenario. The company's
continued investments in product innovation and marketing, coupled
with prudent cost management and financial strategy, translate into
sound and relatively stable EBITDA margins and very comfortable leverage
and liquidity levels.
Offsetting these positive factors are prospects for more subdued volume
growth, given current economic slowdown in some of the countries
where it operates, mainly Brazil. Also, there is a
likelihood of continued high dividend payouts to ABI, although these
are expected to match cash flow generation. The commodity-like
nature and volatility of input costs and Ambev's reliance on effective
hedging strategies are also incorporated in the ratings.
Headquartered in São Paulo, Brazil, Ambev S.A.
operates in the production, distribution and sales of alcoholic
and non-alcoholic beverages in 16 countries across the Americas.
For the last twelve months ending September 2015, Ambev reported
net sales of BRL 43.7 billion (approximately USD 14.5 billion
at average exchange rates for the period) with EBITDA margin of 48%
in the same period.
Ambev is the largest brewer in Latin America and the world's fourth largest
beer producer in terms of volume, in addition to being PepsiCo's
largest bottler. Its large portfolio includes well-known
brands, such as Skol, Brahma, Stella Artois, Budweiser,
Antarctica, Quilmes, among others, as well as Gatorade,
Pepsi Cola, H2OH! and Lipton Ice Tea, sold under license
from PepsiCo. Since 2004, Ambev has been controlled by Anheuser-Busch
InBev (ABI), a leading global brewer and one of the world's top
five beverage producers.
The principal methodology used in these ratings was Global Alcoholic Beverage
Industry published in October 2013. Please see the Credit Policy
page on www.moodys.com.br for a copy of this methodology.
Moody's National Scale Credit Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale credit ratings in that they are
not globally comparable with the full universe of Moody's rated entities,
but only with NSRs for other rated debt issues and issuers within the
same country. NSRs are designated by a ".nn"
country modifier signifying the relevant country, as in ".za"
for South Africa. For further information on Moody's approach to
national scale credit ratings, please refer to Moody's Credit rating
Methodology published in June 2014 entitled "Mapping Moody's National
Scale Ratings to Global Scale Ratings".
REGULATORY DISCLOSURES
Information sources used to prepare the rating are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's information.
Moody's considers the quality of information available on the rated entity,
obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not an auditor
and cannot in every instance independently verify or validate information
received in the rating process.
The rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
Please see the ratings disclosure page on www.moodys.com.br
for general disclosure on potential conflicts of interests.
Moody's America Latina Ltda. may have provided Other Permissible
Service(s) to the rated entity or its related third parties within the
12 months preceding the credit rating action. Please see the special
report "Services provided to entities rated by Moody's America Latina
Ltda." on our website www.moodys.com.br for
further information.
Entities rated by Moody's America Latina Ltda. (and the rated entities'
related parties) may also receive products/services provided by parties
related to Moody's America Latina Ltda. engaging in credit ratings
activities. Please go to www.moodys.com.br
for a list of entities receiving products/services from these related
entities and the products/services received. This list is updated
on a quarterly basis.
The date of the last Credit Rating Action was 30/10/2015.
Moody's ratings are constantly monitored, unless designated as point-in-time
ratings in the initial press release. All Moody's ratings are reviewed
at least once during every 12-month period.
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt 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 rating action on the support provider and in relation to each particular
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.br.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this 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.
Please see ratings tab on the issuer/entity page on www.moodys.com.br
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is the most
reliable and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com.br
for further information.
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page on www.moodys.com.br for further information
on the meaning of each rating category and the definition of default and
recovery.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
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Please see www.moodys.com.br for any updates on changes to
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the rating.
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for additional regulatory disclosures for each credit rating.
Erick Rodrigues
Asst Vice President - Analyst
Corporate Finance Group
Moody's America Latina Ltda.
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16th Floor, Room 1601
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Marianna Waltz, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300
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Moody's places Ambev's ratings on review for downgrade
