Fitch Affirms Starbucks' IDR at 'BBB+'/'F2'; Outlook Stable
29 APR 2019 05:46 PM ET
Fitch Ratings-New York-29 April 2019: Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of Starbucks Corporation (NASDAQ: SBUX) at 'BBB+' and has affirmed the Short-Term IDR at 'F2'. The Rating Outlook is Stable.
Starbucks' 'BBB+'/'F2' ratings balance its shareholder-friendly financial strategy with its substantial FCF, which Fitch expects will exceed $1 billion annually (excluding a one-time tax payment related to a licensing agreement with Nestle in fiscal 2020). The ratings also reflect the company's significant scale and global footprint. Fitch expects Starbucks will maintain total adjusted debt/EBITDAR below 3.5x (capitalizing total rent payments at 8x), in line with its publicly stated target of maintaining leverage (based on lease adjusted base rent of 6x) at less than 3x.