Moody’s Upgrades Foster’s to Baa1 After SABMiller Acquisition
Moody’s Investors Service raised its rating of Foster’s Group Ltd. by one level to Baa1, its third-lowest investment-grade, following the acquisition by SABMiller Plc. (SAB)
“The benefits of SABMiller’s ownership and wider expertise in the global beer markets is likely to positively impact Foster’s business model,” Ian Lewis, a Moody’s senior credit officer, said in a report today. “A number of Foster’s older beer brands, which have had declining earnings and share, such as VB and Crown Lager will be re-invigorated.”
Standard & Poor’s earlier this month also upgraded Melbourne-based Foster’s by one level to BBB+ after London-based SABMiller completed the A$10.5 billion ($10.9 billion) acquisition in December.
Foster’s Chief Executive Officer Ari Mervis said at an investor conference in London in March that SABMiller plans to increase profit margins at the Australian beermaker and carve out greater-than-expected cost savings from the deal.
Credit-default swaps insuring the debt of Foster’s against non-payment rose 1 basis point to 66 basis points as of 10:49 a.m. in Sydney, according to prices from Westpac Banking Corp. (WBC)
The swaps have fallen 25 basis points since Dec. 1, when Foster’s gained shareholder backing for the takeover offer, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
The contracts, which typically climb as investor confidence deteriorates and decrease as it improves, pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.