Fitch places Coca-Cola European on watch

Fitch Ratings said it placed Coca-Cola European Partners plc’s long-term issuer default rating and senior unsecured rating of BBB+ on rating watch negative.

The RWN follows CCEP’s proposed acquisition of Coca-Cola Amatil Ltd., which CCEP said it prefers to fully fund with debt, although it has not ruled out a 20% equity component, Fitch said.

“We see risks of protracted weak operating performance by both CCEP and CCA in 2021 in connection with the pandemic, as well as the possibility that CCEP may deviate from its conservative financial policy after the acquisition. These events create uncertainty around the company’s path to de-leveraging in the event the acquisition goes ahead and could result in a rating downgrade of no more than one notch once the transaction structure and post-transaction financial policy become clear,” Fitch said in a press release.

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