Recently YieldReport flagged an Australian bond issue was coming from the Atlanta-based Coca Cola Company and how a non-bank issuer with a high-end credit rating would allow investors a little more diversity in their bond portfolios without taking on additional credit risk. The issue has not eventuated as yet but perhaps this is just as well from an investor’s point of view as the company’s credit rating has just been downgraded a notch by Standard & Poor’s from AA to AA-. At AA-, Coca Cola is still on par with the major Australian banks and still considered to be blue chip issuer. Its credit rating is also still higher than its arch rival PepsiCo Inc. which is rated A by Standard & Poor’s.
The downgrade has come because S&P is concerned the reduction in leverage from the sale of Coca Cola’s interests in US bottlers will not be sufficient to meet the rating agency’s debt requirements for a AA rated company. Coca Cola has been selling assets since 2013.