MILAN, Italy — Moody’s Investors Service (“Moody’s”) has yesterday assigned a first-time corporate family rating (CFR) of Ba1 and a probability of default rating (PDR) of Ba1-PD to JDE Peet’s N.V. (“JDE Peet’s”), the second largest coffee manufacturer worldwide. The outlook is positive.
The first-time rating assignment follows the successful completion on 29 May of the company’s initial public offering (IPO) on the Amsterdam stock Exchange.
Concurrently, Moody’s has also changed the outlook to positive from stable on the Ba1 ratings of JACOBS DOUWE EGBERTS Holdings B.V. (‘JDE’) and its financing subsidiary, Jacobs Douwe Egberts International B.V..
All ratings of JDE, including the Ba1 corporate family rating, the Ba2-PD probability of default rating and the Ba1 senior secured rating assigned to the E5.47 billion credit facilities outstanding as of June 2020 (including the E500 million undrawn Revolving Credit Facility) borrowed by Jacobs Douwe Egberts International B.V. were affirmed.
“The Ba1 rating of JDE Peet’s is supported by its strong market position and global foothold in the growing coffee industry, and its solid and stable free cash flow generation,” says Paolo Leschiutta, a Moody’s Senior Vice President and lead analyst for JDE Peet’s.
“The rating also reflects its limited product category diversification and some exposure to the coronavirus outbreak. Success in weathering potential demand volatility over the short term, in improving key credit metrics and in executing on the simplification of the capital structure, bringing it more in line with investment grade standards, could support further upward pressure on the ratings,” adds Mr. Leschiutta.
The change of outlook to positive from stable on subsidiary JDE reflects Moody’s expectation of JDE Peet’s eventually refinancing legacy debt of JDE at JDE Peet’s level. While JDE Peet’s does not currently guarantee JDE’s debt, Moody’s expects that the credit quality of the two entities will eventually converge and that JDE will benefit from the increased transparency, improved corporate governance structure and more predictable financial policies associated with JDE Peet’s listing.