Moody’s cuts Dr. Pepper, rates bonds

Moody's Investors Service said it downgraded the ratings of Dr. Pepper Snapple Group, Inc. to Baa2 from Baa1.

This concludes the review for downgrade that was initiated on Jan. 29 when it was announced that Dr. Pepper would merge with Keurig Green Mountain, Inc. (Ba2, RUR) in a leveraging transaction.

The Prime-2 rating was affirmed.

Moody's also assigned new Baa2 ratings to $8 billion of proposed bonds to be issued in multiple tranches by Maple Escrow Subsidiary, Inc. and Baa2 ratings to the senior unsecured bank debt of Maple Parent Holdings Corp. Maple Escrow Subsidiary will be merged into Dr. Pepper, the publicly traded company at closing, and the bank debt at Maple Parent Holdings will become the obligation of Dr. Pepper.

At that point all of the new debt will be pari passu with Dr. Pepper’s existing senior unsecured debt, which will remain outstanding.

The company will be renamed Keurig Dr. Pepper (KDP). At closing, expected in July 2018, the existing debt of Keurig Green Mountain will be fully repaid and the ratings will be withdrawn.

The outlook is negative.

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