Arcos Dorados Achieves Full Investment Grade Status with S&P Rating Upgrade.

Arcos Dorados Holdings has achieved full investment grade status with S&P Global Ratings assigning it a BBB- long-term issuer credit rating with a Stable Outlook. The upgrade reflects the company's leading position in the quick service restaurant industry in Latin America, exclusive McDonald's brand rights, and strong financial profile. The renewed Master Franchise Agreement with McDonald's through 2044 further strengthens its strategic position.

Arcos Dorados Holdings Inc. (NYSE: ARCO), the world's largest independent McDonald's franchisee, has received a significant boost to its credit profile with S&P Global Ratings assigning it a BBB- long-term issuer credit rating with a Stable Outlook. This marks the second investment grade rating received by Arcos Dorados, following Fitch Ratings' upgrade to 'BBB-' in January 2025, thereby achieving full investment grade status [1][2].

The upgrade reflects Arcos Dorados' leading position in the quick service restaurant (QSR) industry in Latin America, its exclusive rights to the McDonald's brand through its Master Franchise Agreement (MFA), and its strong financial profile. S&P highlighted the company's consistent track record of maintaining a conservative financial profile, with stable credit metrics including an S&P-adjusted debt to EBITDA ratio of approximately 2.0x and S&P-adjusted Funds from Operations to Debt near 35% [1][2].

The renewed MFA with McDonald's, valid through the end of 2044 with an additional 20-year renewal option, further strengthens Arcos Dorados' strategic position. This agreement grants the company exclusive access to one of the world's most recognized brands across 20 countries in the region, providing a significant competitive advantage in terms of brand strength, supply chain integration, and access to global operational know-how [1][2].

S&P also noted Arcos Dorados' sound liquidity position, broad geographic footprint, and capacity to withstand a potential Brazilian sovereign stress scenario. The company's prudent financial risk management, lack of near-term debt maturities, and access to committed credit facilities further strengthen its credit profile [1][2].

Both S&P and Fitch highlighted Arcos Dorados' operating performance and prudent financial policy as key drivers of long-term credit quality. Fitch pointed to the company's continued strong operating performance, good liquidity, and comfortable debt maturity profile to support its upgrade in January 2025 [1][2].

Achieving full investment grade status reinforces Arcos Dorados' commitment to maintaining a solid financial position and enhances its standing in global capital markets. This reflects strong confidence in the company's financial discipline and long-term strategic execution.

References:

[1] https://www.marketscreener.com/news/arcos-dorados-achieves-full-investment-grade-with-s-p-s-initial-rating-of-bbb--ce7c5fdddb88f120
[2] https://www.morningstar.com/news/business-wire/20250731454163/arcos-dorados-achieves-full-investment-grade-with-sps-initial-rating-of-bbb