Kraft Heinz Upgraded to Investment Grade by S&P at BBB-

US-based global food company Kraft Heinz was upgraded to BBB- from BB+ with a positive outlook by S&P Global. The upgrade comes on the back of better cost controls and prudent balance sheet management. The rating agency said that improvement in the Kraft Heinz’s operational execution, forecasting and hedging process and divestment of higher commodity volatility business are likely to lead to limited profit erosion in the current high inflation environment. The company also has conducted asset sales for debt reduction and conservative balance sheet management. Regarding its balance sheet, the company has reduced net debt by ~$8.5bn primarily by applying about $6.6bn net divestiture proceeds to debt repayment since 2019. For fiscal 2021, its adjusted leverage was at 3.3x and S&P expects that going forward it will remain at sub 4x levels. It is expected to moderately grow its $2bn annual dividend, and begin share buybacks in the H2 2022.

Kraft Heinz bonds were stable – 3% 2026 was at 97.71, yielding at 3.59%.