Moody's upgrades Green Mountain Coffee Roasters

NEW YORK (AP) -- Moody's Investors Service on Tuesday upgraded Green Mountain Coffee Roasters Inc.'s rating, citing the company's lower debt.

The rating agency increased the Waterbury, Vt., company's corporate family rating one notch to Ba2 from Ba3, keeping it in junk-grade territory. It also upgraded its probability of default rating and speculative grade liquidity rating. The outlook is stable.

Moody's said the upgrade is a result of a significant decline in the company's financial leverage over the past two years, as well as increased clarity on how the industry and its business strategy may impact its credit. That includes intensifying competition when some of Green Mountain's key patents expire, as well as the company's ability to fund and manage the expansion of its business.

Green Mountain makes the Keurig system, which brews beverages one at a time. It was an industry leader but has struggled with increasing competition from other companies that have released their own single-brewing systems.

Moody's said as the pace of growth of the single-serve coffee business has moderated and the competitive environment has become more defined, it has a clearer view of how the company is performing. Moody's expects Green Mountain to continue to invest aggressively in growth. The rating agency also noted that the company is now generating positive free cash flow.

Green Mountain shares rose 47 cents to close at $73.80 amid broader market gains.