MEXICO CITY — Moody’s Investors Service on Jan. 4 assigned a Baa1 rating to Bimbo Bakeries USA, Inc.’s proposed backed senior unsecured global notes.

The debt will be issued at the same time BBU’s 6.05% backed senior notes due in 2029 are reopened. The funds will be used to redeem $408 million in notes due in 2024.

All other credit ratings, including that of parent company Grupo Bimbo SAB de CV’s Baa1 long-term issuer rating were affirmed. The latter rating was assigned to Bimbo in May 2023 in an upgrade from Baa2.

BBU’s credit outlook was changed to stable from no outlook outstanding. Grupo Bimbo also has a stable outlook.

While issued by BBU, the proposed notes will be irrevocably and unconditionally guaranteed on a senior basis by Grupo Bimbo and its operating subsidiaries Bimbo.

“The Baa1 rating on the proposed notes reflects the irrevocable and unconditional guaranty provided by Grupo Bimbo SAB de CV toward the issuer of the notes, Bimbo Bakeries USA, Inc.,” Moody’s said. “Grupo Bimbo’s Baa1 ratings reflect the improvement of its operating results and credit metrics, the company’s solid business position as a global leading producer of baked goods and a relevant player in snacks with a very strong brand portfolio and an extensive distribution network.”

The ratings agency said Bimbo’s strengths are partly counterbalanced by the company’s high portfolio concentration in baked foods and snacks and “lower margins relative to other consumer products companies with vulnerability to rising commodity costs.”

Moody’s also cautioned that the commercial baking market is highly competitive in a number of the markets in which Bimbo operates.

Since its 2017 acquisition of East Balt Bakeries funded by debt, Bimbo has lowered its leverage to two times EBITDA from four. Bimbo’s ratio of EBITDA to interest expense has widened to 5.0 times from 3.9. Bimbo’s debt is mostly fixed rate, but the company faces numerous debt issue maturities between now and 2026, Moody’s said.

Bimbo has stepped up capital spending in recent years, which Moody’s said has resulted in negative cash flow. Moody’s said the investment supports growth, increases capacity and enhances productivity. Negative cash flow is expected to persist this year.