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Rating Action: Moody's rates P&G bonds at Aa3; stableGlobal Credit Research - 27 Jan 2022New York, January 27, 2022 -- Moody's Investors Service ("Moody's") today assigned an Aa3 rating to the 5 and 10-year senior unsecured US dollar notes offered by The Procter & Gamble Company. The proceeds will be used for general corporate purposes including debt refinancing. The rating outlook is stable. The issuance is viewed to be credit positive because it improves liquidity and lengthens the company's maturity profile.The following ratings/assessments are affected by today's action:New Assignments:..Issuer: Procter & Gamble Company (The)....Senior Unsecured Regular Bond/Debenture, Assigned Aa3RATINGS RATIONALEP&G's Aa3/Prime-1 ratings reflect the company's significant cash flow and financial flexibility. P&G also benefits from a large portfolio of well-known branded consumer products with leading market shares. The portfolio, combined with the company's global distribution capabilities, provide operating stability, considerable scale, and product and geographic diversity. These strengths and a focus on strong execution will sustain P&G's market position and cash flow performance. The company benefitted from the effects of the coronavirus that forced consumers to remain home during the pandemic but it faces challenges as it cycles some of the strong demand and as inflation and supply chain struggles continue. P&G is also challenged by its mature and highly competitive product categories that require continual innovation to maintain growth. Cost savings programs should further enhance investment capacity and help offset margin pressure. P&G's cash flow provides flexibility to maintain low leverage, but shareholder distributions including the sizable dividend are aggressive.Environmental, Social and Governance RiskThe coronavirus outbreak and the government measures put in place to contain it continue to disrupt economies and credit markets across sectors and regions. Although an economic recovery is underway, it is tenuous, and its continuation will be closely tied to containment of the virus. As a result, there is uncertainty around Moody's forecasts. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety.Environmental considerations are meaningful (land, water, raw materials, and energy usage, packaging, and waste) but rising costs to meet environmental standards and consumer preferences would likely be passed on to consumers. P&G has various commitments to lessen its overall impact on the environment with goals to use 100% recyclable packaging, improve its water use, reduce greenhouse gas emissions, and use renewable electricity by 2030. For example, P&G's manufacturing sites will cut greenhouse gas emissions in half and will purchase enough renewable electricity to power 100% of its plants. In terms of social considerations, the company supports diversity and inclusion with more than 140 nationalities represented in its work force. P&G effectively manages many social risks including changing consumer preferences, responsible sourcing, product quality, and aging populations. Data, privacy, and information security are growing social risks that requires considerable investment to protect.In terms of governance, Moody's recognize P&G's conservative financial policies but somewhat aggressive shareholder returns. The majority of P&G's Board members are independent directors and have extensive consumer product experience. P&G is a widely held public company.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe stable rating outlook reflects Moody's expectation that P&G will continue to generate meaningful free cash flow, and manage shareholder distributions to maintain a conservative financial profile.Moody's could upgrade the ratings if the company maintains its strong operating profile and generates above average organic revenue and profit growth. The company would also need to establish stronger credit metrics. These include sustaining retained cash flow to net debt of at least 30%.Ratings could be downgraded if the company's size, diversity, or market position declines, or margins and cash flow contract. Ratings could also be downgraded if financial policies become more aggressive. Specifically, ratings could be downgraded if retained cash flow to net debt is sustained below 25% or if EBIT margins are sustained below 20%.The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1202237. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.The Procter & Gamble Company, based in Cincinnati, Ohio, manufactures and markets products in fabric and home care, baby, feminine and family care, beauty, health care, and grooming. P&G's portfolio consists of some of the most well-known consumer product brands including Tide, Gillette, Pampers, Crest, and Swiffer. The publicly traded company generates over $78 billion in annual revenues.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Linda Montag Senior Vice President Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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