Moody's Downgrades Kellogg, Two Others

  • 28 Jan 2001
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Moody's Investors Service downgraded Kellogg Company's senior unsecured debt to Baa2 from Aa2 in anticipation of the company's acquisition of Keebler for $3.8 billion in cash, plus the assumption of $555 million in existing Keebler debt. Kellogg is expected to obtain permanent long-term financing for a large portion of the acquisition financing within six months following the transaction. Keebler's bank credit facility will be cancelled following the acquisition, and the rating will be withdrawn. The acquisition will nearly triple Kellogg's debt. Despite the significant increase in debt, Moody's expects Kellogg to continue to direct a large portion of its internal cash flow to cash dividends as opposed to debt reduction. The rating also reflects Kellogg's exposure to the highly competitive, slow growth ready-to-eat cereal business. Supporting the rating is the relatively faster-growing cookie and cracker business to Kellogg's portfolio. Keeblers holds the number two U.S. market share in cookies and crackers. Calls to Thomas Webb, cfo for Kellogg, were referred to a spokesman, who did not return them by press time. Kellogg is headquartered in Battle Creek, Mich.

* Moody's downgrade the ratings on WEC Company's $40 million secured credit facility to B3 from Ba3 due to the company's weak overall performance caused primarily by a significant decline in demand in the construction segment. Meanwhile, manufacturing and labor costs have increased. The negative outlook incorporates the likelihood of continued weakness in construction into 2001, which could drain the company's cash. Moody's also factors in that the company violated bank covenant requirements (for which it obtained waivers) for two consecutive quarters through September 2000, and will likely fail to meet covenants for the fourth quarter ended in December. However, the rating is supported by the new operating management, which has considerable experience in restructuring troubled companies. WEC, the operating subsidiary of Wood Equipment Company, is located in Rockford, Ill. and is a manufacturer of attachments for a variety of mowing, cutting and clearing, and construction applications under various brand names.

* Edison Mission Energy's senior unsecured debt rating was nudged down to Baa3 from Baa1 by Moody's because of weak performance from its investment in Fidler's Ferry and Ferrybridge. The rating also considers the potential implications to EME's balance sheet and leverage in light of the loss of Edison International as a source of acquisition capital support particularly if EME were to consider any significant acquisitions. Supporting the rating is the highly predictable nature of EME's cash flow, with approximately 65% of it coming from contracted revenues with little cash flows coming from non-investment grade companies.

  • 28 Jan 2001

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

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1 Citi 12,796.80 35 13.50%
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3 Bank of America Merrill Lynch 8,771.28 25 9.25%
4 JPMorgan 7,423.52 25 7.83%
5 RBC Capital Markets 4,569.28 13 4.82%