Brazil: Dow Jones Moody's puts AmBev local rating on review for upgrade

Moody's Investors Service said August 14 it has put its global local currency rating for Brazilian brewer Companhia de Bebidas das Americas (ABV), or AmBev, on review for a possible upgrade, Dow Jones Newswires released August 14.

Moody's current local currency rating for AmBev is Baa3. The company's foreign currency issuer rating of Ba2 was put on review for a possible upgrade at the beginning of August, when the ratings firm put Brazil's overseas sovereign debt on review as well. The country's foreign bonds are at a speculative-grade Ba3.

Analyst Soummo Mukherjee said in a press statement that AmBev's credit metrics continue to be "significantly better" than its peers, "despite operating in predominantly emerging markets and following a rather aggressive shareholder return policy."

Standard & Poor's upgraded its foreign currency credit rating on AmBev to BBB from BBB-minus earlier this month. S&P's local currency rating on AmBev is BBB and the outlook on both ratings is positive. Meanwhile, Fitch Ratings has a BBB rating on AmBev's foreign currency debt and a stable outlook.

AmBev is seeking to keep its net debt at a ratio of 1.3 times EBITDA, Moody's said. Earlier this month, the company upped its stake in Quilmes Industrial SA, or Quinsa, from 56.72% to 91.18% for $1.25 billion. AmBev used cash and proceeds from a 2.1 billion real ($940 million) local-currency debenture issue to fund the transaction. Moody's said AmBev's debt ratios should stay the same, despite a slight increase in leverage from the Quinsa deal.

Meanwhile, the brewer's growth prospects are healthy, Moody's said, and the company is maintaining its dominant market share of 68.8% in Brazil. AmBev posted August 14 second-quarter net profit of BRL483.3 million, up from BRL305.2 million a year earlier. More than 60% of the company's net revenues of BRL4.037 billion for the period came from Brazilian operations.

August 14, in mid-day trade, shares of AmBev in New York were up 0.7% at $41.15.

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