CHICAGO — Fitch Ratings has assigned an A+ rating to PepsiCo, Inc.’s new $500 million, three-year, 0.8% and $750 million, 10-year, 3% senior unsecured notes. The rating outlook is negative, which reflects that PepsiCo’s leverage is above Fitch’s expectations for the A+ rating category.

“Fitch recognizes PepsiCo has significant flexibility due to its substantial cash flows, but the company’s commitment to share repurchases and continuing acquisitions may require further debt financing,” Fitch said. “Any additional increase in leverage would make it difficult for PepsiCo to keep metrics within range of the A+ category despite its financial flexibility.”

PepsiCo’s total debt-to-operating EBITDA was 2.2 times for the 12 months ended June 11, which compared with 2.1 times for the fiscal year ended Dec. 25, 2010. Fitch anticipates PepsiCo’s leverage to remain in the range of 2 times in the near term. Fitch said PepsiCo meaningfully reducing leverage below 2 times and funding share repurchases with free cash flow likely would lead to a stable outlook. Fitch defined free cash flow as cash flow from operations less capital expenditures and dividends.

“Fitch ratings consider PepsiCo’s diverse food and beverage product mix, comprehensive geographic footprint and its ability to consistently generate substantial operating cash flow,” Fitch said. “The ratings further incorporate PepsiCo’s generally shareholder-friendly position illustrated by its large dividend of over $3 billion for the 12 months ended June 11, 2011, which has grown over 10.5% annually the past three fiscal years, and historically aggressive share repurchases, which averaged a net $2.5 billion over the past three fiscal years and is substantially al of the company’s FCF (free cash flow).”

The two notes will be issued by PepsiCo and will rank equally with PepsiCo’s senior unsecured obligations. The company plans to use the net proceeds for general corporate purchases. The notes are being issued under the company’s existing indenture dated May 21, 2007. Covenants include limitations on secured debt. PepsiCo is not bound by any financial covenants. The notes are callable by PepsiCo subject to a make-whole provision.

PepsiCo had about $27.3 billion of debt as of June 11. Operating EBITDA-to-gross interest was 13.1 times and funds from operations adjusted leverage was 3 times for the 12 months ended June 11, which compared with operating EBITDA-to-gross interest of 13.4 times and funds from operations adjusted leverage of 3.5 times for the fiscal year ended Dec. 25, 2010.

PepsiCo in February completed its purchase of two-thirds of Russian food and beverage company Wimm-Bill-Dann Foods for $3.8 billion. Fitch said PepsiCo’s completed tender for Wimm-Bill-Dann’s debt amounting to $776 million in principal may improve leverage statistics in the third quarter of this fiscal year.

Fitch said PepsiCo had adequate liquidity with $2.9 billion of cash and combined capacity of about $5.75 billion under its 364-day and four-year revolving credit facilities, which expire in June 2012 and June 2015, respectively.