AB InBev’s credit rating was downgraded by Moody’s Investors Service from A3 to a sobering Baa1 which is the lowest investment grade and only three steps from junk. The financial experts believe that the beer giant's borrowings which exceed US$100 billion and largely stem from its 2016 acquisition of SABMiller will remain high relative to its cash flow for the next several years.
Even the decision to slash dividend payouts to shareholders by half two months ago which caused AB InBev’s share price to crash (inside.beer, 25.10.20018) will not be enough to substantially grow earnings and cash flow. Deleveraging will lag behind original expectations due largely to foreign currency fluctuations and underperformance of certain emerging economies.
The company’s debt is the highest in the global food and beverage industry and amounts at the moment to about five times earnings before interest, taxes, amortisation and depreciation. Moody’s expects it to go down to four within two years. The rtaing could be cut again if leverage does not fall to 4.5 times or below by the end of 2020.