S&P rates Bacardi loans BBB-

S&P said it assigned a BBB- rating to the following senior unsecured debt tranches issued or to be issued by Bacardi Ltd. to fund the company's acquisition of Patron Spirits International:

The issues consist of a $700 million tranche A term loan due Feb. 28, 2021 and $500 million tranche B term loan due Feb. 28, 2023.

Bacardi's existing and proposed debt consists entirely of senior unsecured obligations, the agency said.

Therefore, the subordination risk to the company's senior unsecured debt is immaterial, S&P said, and Bacardi's senior unsecured debt is rated at BBB-, the same as the corporate credit rating.

Bacardi has a strong brand portfolio that includes several leading spirits brands across multiple categories and geographies, including Bacardi, Bombay, Dewar's, Grey Goose, Martini and now Patron, the agency said.

S&P said it estimates pro forma debt-to-EBITDA ratio following the Patron acquisition will be higher than 5x compared with 2.5x for the 12 months that ended Dec. 31, 2017.

The agency also said it estimates Bacardi will modestly de-leverage during the next two years with adjusted leverage declining to 4x by the end of fiscal 2020.

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