NEW YORK: Moody's said on Wednesday it had cut Starbucks Corporation's senior unsecured ratings to A3 from A2 and short-term commercial paper rating to Prime-2 from Prime-1.
The ratings outlook is stable.
Moody's said it made the move because of the Seattle-based coffee chain's plan to return US$15bn to shareholders through a combination of dividends and share repurchases from 2018-2020.
The shareholder program, Moody's said, "will be partially funded with additional debt that will result in a material deterioration of credit metrics that will be more representative of the revised ratings".
Moody's also said the increase in debt levels to support shareholder returns beyond previous expectations was an adoption of a more shareholder-focused financial policy.
"We estimate that the additional debt needed to fund the proposed shareholder returns will result in leverage exceeding 2.2 times and retained cash flow to total debt of around 25pc," Moody's said.
"Moreover, we expect management to return US$15bn to shareholders over the next three years, regardless of operating performance."
Comments
Comments are closed for this article.