Fitch Ratings Downgrades Kraft Issuer Default Rating

Fitch Ratings reported that it has downgraded Kraft Foods' (NYSE: KFT) issuer default rating to BBB- from BBB following the company's deal to buy candy maker Cadbury (NYSE: CBY) for about $19.5 billion.

Fitch said that Kraft's pro forma debt will initially be almost $32 billion, leading to a pro forma leverage of around 4 times total debt to operating EBITDA.

According to Fitch, that multiple should fall to between 3 times and 3.5 times over the next two years.

"Refraining from share repurchases is critical in the near-term, as free cash flow is anticipated to be used for debt reduction," the rating agency said. It went on to state that its outlook for the group's rating is stable.