The longest-dated portion of the planned issuance, maturing in 30 years, may yield as much as 1.75 percentage points more than comparable government securities, lower than the 2.3 percentage points the debt was initially marketed at, said the person familiar with the deal.

McDonald’s "is resorting to the customary ‘balance sheet optimization’ to boost earnings per share, the dividend rate, and the return of cash to shareholders," Carol Levenson, an analyst at Gimme Credit LLC, wrote in a note to clients. The firm has an "underperform" rating on the company’s debt. "Fundamentals are uneven at best," she wrote.

‘Aggressive’ Policy

Both Moody’s Investors Service and Standard & Poor’s dropped McDonald’s credit rating one level to three steps above junk after the REIT announcement, criticizing the decision to return cash to shareholders with additional debt.

"Moody’s views this increase as McDonald’s maintaining an aggressive financial policy that will result in a material deterioration in credit metrics and limit its financial flexibility," according to a company statement.

Fitch Ratings revised McDonald’s rating to negative from stable, citing the company’s "aggressive financial strategy."

McDonald’s sold on May 18 $2 billion in a three-part sale that was its largest dollar-denominated issue since 2008, and 2 billion euros ($2.3 billion) of securities in its biggest offering in the single currency. The borrowings came two weeks after McDonald’s implemented the turnaround plan, an announcement that also drew ratings cuts from S&P and Moody’s.
 

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