Campbell Soup will pay $2.7 billion in cash to buy Sovos Brands, parent of Rao’s pasta sauces and noosa yogurts.
S&P Global Ratings lowered Campbell Soup’s Co.’s rating to BBB- from BBB on Monday, placing it one notch above speculative-grade, or junk, status.
“As a result,... S&P Global Ratings lowered Campbell Soup’s Co.’s rating to BBB- from BBB on Monday, placing it one notch above speculative-grade, or junk, status. “As a result, we forecast S&P Global Ratings-adjusted pro forma debt leverage will increase to about 4x at close from 2.8x for the 12 months ended April 30, 2023,” the rating agency said in a statement. “We do not forecast the company to restore leverage to the low-3x area until at least fiscal 2026.”As the following chart from data-as-a-service company BondCliQ Media Services shows, there were only sellers of the bonds after the downgrade.
“We estimate the company’s interest expense will increase meaningfully with the new debt and the company plans to increase capex with capacity expansion projects over the next three years,” the rating agency noted. “As a result, our base case estimate for FOCF is lower than historical levels.”
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