Fitch Ratings on Oct. 8 said it has affirmed and withdrawn all long-term ratings for McDonald's Corp., including the U.S. fast-food chain's long-term BBB issuer default rating, citing "commercial reasons."
The agency also downgraded McDonald's short-term ratings to F3 from F2 following Fitch's short-term criteria change and withdrew those ratings as well.
Fitch said McDonald's BBB and F3 ratings balance the company's shareholder-friendly financial strategy with substantial free cash flow.
The agency said it expects the company's free cash flow to surpass $1 billion annually, for its total adjusted debt/EBITDAR to be in the mid-to-high 3.0x range, and for McDonald's to return over $8 billion of cash to shareholders in 2019. The company has returned $46 billion of cash to its shareholders from 2014-2018.
Fitch said it expects McDonald's to continue to grow its dividend and repurchase shares after its current $25 billion three-year buyback program is completed by the end of 2019.
The rating agency, meanwhile, highlighted the chain's higher average check and improved global guest counts, which improved the company's global comparable sales to 5.4% in the first quarter and 6.5% in the second quarter.
The high average check is driven by a favorable shift in product mix and further deployment of self-order kiosks and delivery, Fitch said.
