Kraft Heinz is buying back as much as $2.8 billion of its bonds as the junk-rated company looks to further cut its debt load after closing on the sale of its nuts business.
The company launched a tender offer Monday to repurchase as many as 10 individual notes with maturities ranging from 2028 to 2042. It’s at least the second debt buyback for the company this year, after a $1 billion booked transaction in March.
The company, formed by a megamerger that ultimately left it saddled with around $30 billion of debt, is cleaning up its balance sheet as part of a broader strategy to remake itself. An earnings slump before the pandemic spurred S&P Global Ratings and Fitch Ratings to downgrade the company to junk status in February 2020.
Since then, Kraft Heinz has shown signs of improving earnings, helped in part by a pandemic that has boosted demand for quick-to-serve meals while paying down borrowings.
The company’s announcement in February of the $3.35 billion sale of its Planters snack brand to Hormel Foods has prompted Fitch Ratings to lift its outlook for the company to positive, and S&P Global Ratings noted the same month that the food maker had benefited from homebound consumers buying more packaged foods.
Both S&P and Fitch have Kraft Heinz at BB+, the highest junk-bond grade. Moody’s Investors Service has the company at Baa3, the lowest investment-grade rating.