Blue-chip soda titan Coca-Cola Company (NYSE: KO) slipped into the red this morning after Standard & Poor's last night revised the company's outlook to "negative." The ratings change also affects the Dow component's two main bottling units, Coca-Cola Enterprises (NYSE: CCE) and Coca-Cola Hellenic Bottling (NYSE: CCH). Analyst Jean Stout noted, "Weak economic conditions in select markets and volatile commodity costs have pressured the Coke system's operating performance."
Currently, Coca-Cola's S&P rating is "A+," the fifth-highest investment-grade notch. The downwardly revised outlook indicates that the rating is in danger of being cut over the next one to two years. In response to S&P's "negative" label, CCE postponed pricing a previously announced, $1 billion bond issue.
Stout added that "reduced share repurchases at Coke could restore some financial flexibility to the Coke system," but warned, "weakening macroeconomic conditions, as well as further acquisitions at Coke, CCE, or CCHB will likely further weaken Coke system credit measures."
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