Kimberly-Clark Corp.'s Proposed Senior Unsecured Notes Due 2029 Rated 'A'


CHICAGO (S&P Global Ratings) April 23, 2019--S&P Global Ratings today assigned its 'A' issue-level rating to Dallas-based Kimberly-Clark Corp.'s proposed senior unsecured notes due 2029. The company will draw the offering from its Rule 415 shelf registration statement filed on Feb. 7, 2019. We expect the company to use the net proceeds from the leverage-neutral issuance for general corporate purposes, including to repay its outstanding commercial paper. Kimberly-Clark had about $7.9 billion of debt outstanding as of March 31, 2019.
All of our existing ratings on the company, including our 'A' long-term and 'A-1' short-term issuer credit ratings, remain unchanged.
Our ratings on Kimberly-Clark incorporate its solid market shares in North American tissue, global diapers, incontinence care, and feminine care; its portfolio of well-known brand names (most of which have high consumer brand equity); the nondiscretionary demand for most of the product segments in which the company competes; its good geographic diversity; its solid profitability; and its ongoing cost-saving initiatives. The ratings also reflect the significant competition that Kimberly-Clark faces from formidable global competitors including Procter & Gamble Co. and Georgia-Pacific LLC. We also believe there are effective private-label competitors in the tissue space, which weakens the company's pricing power in that segment. We anticipate that Kimberly-Clark's leverage will remain temporarily elevated in the mid-2x area because of the sizable costs associated with its large global restructuring program, as well as commodity and foreign-exchange headwinds. However, we expect the company's profit and credit measures to improve as management's productivity enhancements take hold. We also believe that Kimberly-Clark's financial policy will continue to support our current rating.
We rate the group's debt at the same level as our issuer credit rating on the company. Parent Kimberly-Clark Corp. is the issuer of the majority of the group's debt, which primarily consists of senior unsecured notes. The group's low leverage limits the possibility than any lenders will be significantly disadvantaged relative to other lenders. In addition, we believe the majority of the company's senior unsecured debt is pari passu.
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