Recommendation
AB InBev improved its performance through 2022 and the first quarter of FY 2023 despite inflationary pressures and tighter economic conditions, beating both revenue and net income expectations for FY 2022 as well as for Q1 of FY 2023. The Company has been committed to decreasing its debt burden, lowering total debt from $107.00 billion in FY 2018 to $78.88 billion as at FY 2022. This has improved credit metrics as evidenced by the Company’s issuer credit ratings being upgraded by both Moody’s and S&P from Baa1 to A3 and from BBBB+ to A- respectively during the 2023 calendar year. The prospects for improved company performance seem to be reflected in the ABIBB 3.65% 2026 notes, with the bonds trading at narrower spreads than its 6-month average. Despite the narrowing of credit spreads, the issuer is currently at a higher credit rating than many in its peer group and we have the opinion that these notes are attractively priced at current levels. The bond currently represents a spread over the US 3-year treasury of 50 basis points; the ICE BofA Single-A US Corporate Index Option-Adjusted Spread over US treasuries is 116-bps, 66-bps higher than the spread of these notes. This difference can be explained by the improving performance, the continued improvement in credit metrics, and the very high liquidity of these notes compared to others in its category. On balance, we recommend that investors MARKETWEIGHT the ABIBB 3.65% 2026 bonds in their portfolio.
| Industry: | Food and Beverage |
|---|---|
| Bond Name | ABIBB 3.65% 2026 /US03522AAG58 |
| Credit Rating (Moody’s)/Outlook | A3/Stable |
| Maturity | February 1 st, 2026 |
| Rank | US$3.34 Bn |
| Current Price (June 05, 2023) | US$97.12 |
| Yield to Maturity | 4.83% |
| Yield to Worst (@ maturity) | 4.83% |
| Recommendation | MARKETWEIGHT |
Anheuser Busch Bond Analysis | Fixed Income Analysis
