Pernod Ricard still focused on cutting debt

Pernod Ricard still focused on cutting debt

Pernod Ricard has attained an "investment grade" credit rating at Moody's, adding more evidence that the drinks giant is close to chalking off debt accrued via its purchase of Vin & Sprit.

Moody's said today (8 September) that it has upgraded Pernod Ricard to Baa3 from Ba1. "The upgrade to investment grade recognises the improvement in Pernod's operational performance in the past year," said Moody's.

While the agency signalled that Pernod will likely only retain the rating if it makes good on its plan to further cut debt, the upgrade is significant. For the past year, Pernod Ricard has made an "investment grade" credit rating its key objective, prizing this ahead of acquisitions.

Investors will now be watching for similar action by the other major ratings agencies. At a briefing for journalists this week, Pernod reiterated that it will continue to focus on cutting debt over the next 12 months. 

Pernod's CFO, Gilles Bogaert, told journalists: "We have clearly stated that our priority has been debt reduction,” said Bogaert. “In terms of M&A, a massive acquisition short-term is not on the agenda.”

He added, however: “We are open to tactical moves that would be consistent with our deleveraging objectives.” Pernod's net debt to EBITDA ratio was 4.4 at the end of June and it wants a ratio of "close to four" by the end of June 2012. 

The firm has prioritised debt reduction since the acquisition of Absolut vodka owner Vin & Sprit in 2008.