YUM BRANDS INCYUM
YUM BRANDS INC Debt Disclosure
Short-term Borrowings and Long-term Debt
Interest expense on Short-term borrowings, Long-term debt and cash pooling arrangements was $544 million, $542 million and $602 million in 2025, 2024 and 2023, respectively.
| 2025 | 2024 | |||||||||||||
| Short-term Borrowings | ||||||||||||||
| Current maturities of long-term debt | $ | 39 | $ | 29 | ||||||||||
Other | 2 | — | ||||||||||||
| 41 | 29 | |||||||||||||
| Less current portion of debt issuance costs and discounts | (3) | (2) | ||||||||||||
| Short-term borrowings | $ | 38 | $ | 27 | ||||||||||
| Long-term Debt | ||||||||||||||
| Securitization Notes | $ | 4,306 | $ | 3,743 | ||||||||||
| Subsidiary Senior Unsecured Notes | 750 | 750 | ||||||||||||
| Revolving Facility | 300 | 350 | ||||||||||||
| Term Loan A Facility | 494 | 500 | ||||||||||||
| Term Loan B Facility | 1,429 | 1,444 | ||||||||||||
| YUM Senior Unsecured Notes | 4,550 | 4,550 | ||||||||||||
Finance lease obligations (See Note 12) | 148 | 67 | ||||||||||||
| $ | 11,976 | $ | 11,404 | |||||||||||
| Less long-term portion of debt issuance costs and discounts | (66) | (69) | ||||||||||||
| Less current maturities of long-term debt | (39) | (29) | ||||||||||||
| Long-term debt | $ | 11,872 | $ | 11,306 | ||||||||||
Securitization Notes
Taco Bell Funding, LLC (the “Issuer”), a special purpose limited liability company and a direct, wholly-owned subsidiary of Taco Bell Corp. (“TBC”) through a series of securitization transactions has issued fixed rate senior secured notes collectively referred to as the “Securitization Notes”. The following table summarizes Securitization Notes outstanding at December 31, 2025:
| Interest Rate | ||||||||||||||||||||||||||
| Issuance Date | Anticipated Repayment Date(a) | Outstanding Principal (in millions) | Stated | Effective(b) | ||||||||||||||||||||||
| November 2018 | November 2028 | $ | 595 | 4.940 | % | 5.06 | % | |||||||||||||||||||
| August 2021 | February 2027 | $ | 884 | 1.946 | % | 2.11 | % | |||||||||||||||||||
| August 2021 | February 2029 | $ | 590 | 2.294 | % | 2.42 | % | |||||||||||||||||||
| August 2021 | August 2031 | $ | 737 | 2.542 | % | 2.64 | % | |||||||||||||||||||
| September 2025 | August 2030 | $ | 1,000 | 4.821 | % | 5.04 | % | |||||||||||||||||||
| September 2025 | August 2032 | $ | 500 | 5.049 | % | 5.21 | % | |||||||||||||||||||
(a)The legal final maturity dates of the Securitization Notes issued in 2018, 2021 and 2025 are November 2048, August 2051 and August 2055, respectively. If the Issuer has not repaid or refinanced a series of Securitization Notes prior to its respective Anticipated Repayment Dates, rapid amortization of principal on all Securitization Notes will occur and additional interest will accrue on the Securitization Notes.
(b)Includes the effects of the amortization of any discount and debt issuance costs.
The Securitization Notes were issued in transactions pursuant to which certain of TBC’s domestic assets, consisting principally of franchise-related agreements and domestic intellectual property, were contributed to the Issuer and the Issuer’s special purpose, wholly-owned subsidiaries (the “Guarantors”, and collectively with the Issuer, the “Securitization Entities”) to secure the Securitization Notes. The Securitization Notes are secured by substantially all of the assets of the Securitization Entities, and include a lien on all existing and future U.S. Taco Bell franchise and license agreements and the royalties payable
thereunder, existing and future U.S. Taco Bell intellectual property, certain transaction accounts and a pledge of the equity interests in asset-owning Securitization Entities. The remaining U.S. Taco Bell assets that were excluded from the transfers to the Securitization Entities continue to be held by Taco Bell of America, LLC (“TBA”) and TBC. The Securitization Notes are not guaranteed by these remaining U.S. Taco Bell assets, the Company, or any other subsidiary of the Company.
On September 24, 2025, the Issuer completed refinancing certain Securitization Notes through the issuance of additional Securitization Notes totaling $1.5 billion (the "2025-1 Notes"). The net proceeds from the issuance of the 2025-1 Notes were used to repay in full an existing series of Securitization Notes totaling $938 million with an Anticipated Repayment Date of May 2026. The remaining net proceeds were used to pay certain transaction-related expenses and for general corporate purposes (including, without limitation, purchases of franchise restaurants). As a result of the issuance of the 2025-1 Notes, $14 million of fees were capitalized as debt issuance costs. The debt issuance costs are being amortized to Interest expense, net through the Anticipated Repayment Dates of the 2025-1 Securitization Notes utilizing the effective interest method.
Payments of interest and principal on the Securitization Notes are made from the continuing fees paid pursuant to the franchise and license agreements with all U.S. Taco Bell restaurants, including both company and franchise operated restaurants. Interest on and any principal payments of the Securitization Notes are due on a quarterly basis. In general, no amortization of principal of the Securitization Notes is required prior to their Anticipated Repayment Dates unless as of any quarterly measurement date the consolidated leverage ratio (the ratio of total debt to Net Cash Flow (as defined in the related indenture)) for the preceding four fiscal quarters of either the Company and its subsidiaries or the Issuer and its subsidiaries exceeds 5.0:1 (or 5.5:1 for the 2025-1 Notes), in which case amortization payments of 1% per year of the outstanding principal as of the closing of the Securitization Notes are required. As of the most recent quarterly measurement date the consolidated leverage ratio for the Issuer and its subsidiaries did not exceed 5.0:1 and, as a result, amortization payments are not required.
The Securitization Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Issuer maintains specified reserve accounts to be available to make required interest payments in respect of the Securitization Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Securitization Notes under certain circumstances, (iii) certain indemnification payments relating to taxes, enforcement costs and other customary items and (iv) covenants relating to recordkeeping, access to information and similar matters. The Securitization Notes are also subject to rapid amortization events provided for in the indenture, including events tied to failure to maintain a stated debt service coverage ratio (as defined in the related indenture) of at least 1.1:1, gross domestic sales for U.S. Taco Bell restaurants being below certain levels on certain measurement dates, a manager termination event, an event of default and the failure to repay or refinance the Securitization Notes on the Anticipated Repayment Date (subject to limited cure rights). The Securitization Notes are also subject to certain customary events of default, including events relating to non-payment of required interest or principal due on the Securitization Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, certain judgments and failure of the Securitization Entities to maintain a stated debt service coverage ratio. As of December 31, 2025, we were in compliance with all of our debt covenant requirements and were not subject to any rapid amortization events.
In accordance with the indenture, certain cash accounts have been established with the indenture trustee for the benefit of the note holders, and are restricted in their use. The indenture requires a certain amount of securitization cash flow collections to be allocated on a weekly basis and maintained in a cash reserve account. As of December 31, 2025, the Company had restricted cash of $92 million primarily related to required interest reserves included in Prepaid expenses and other current assets on the Consolidated Balance Sheets. Once the required reserve obligations are satisfied, there are no further restrictions, including payment of dividends, on the cash flows of the Securitization Entities. The amount of weekly securitization cash flow collections that exceed the required weekly allocations is generally remitted to the Company.
Additional cash reserves are required if any of the rapid amortization events occur, as noted above, or in the event that as of any quarterly measurement date the Securitization Entities fail to maintain a debt service coverage ratio (or the ratio of Net Cash Flow to all debt service payments for the preceding four fiscal quarters) of at least 1.75:1. During the most recent quarter ended December 31, 2025, the Securitization Entities maintained a debt service coverage ratio significantly in excess of the 1.75:1 requirement.
Term Loan Facilities, Revolving Facility and Subsidiary Senior Unsecured Notes
KFC Holding Co., Pizza Hut Holdings, LLC, and TBA, each of which is a wholly-owned subsidiary of the Company, as co-borrowers (the “Borrowers”) have entered into a credit agreement providing for senior secured credit facilities and a $1.5 billion revolving facility (the “Revolving Facility”). The senior secured credit facilities, which include a Term Loan A Facility and a Term Loan B Facility, and the Revolving Facility are collectively referred to as the “Credit Agreement”. Additionally, the
Borrowers through a series of transactions have issued Subsidiary Senior Unsecured Notes (collectively referred to as the “Subsidiary Senior Unsecured Notes”).
The following table summarizes borrowings outstanding under the Credit Agreement, as well as our Subsidiary Senior Unsecured Notes as of December 31, 2025. There were $300 million in outstanding borrowings under the Revolving Facility and $12 million of letters of credit outstanding as of December 31, 2025.
| Interest Rate | ||||||||||||||||||||||||||||||||
| Issuance Date | Maturity Date | Outstanding Principal (in millions) | Stated | Effective(c) | ||||||||||||||||||||||||||||
| Term Loan A Facility | April 2024 | (a) | $ | 494 | (b) | 4.71 | % | |||||||||||||||||||||||||
| Term Loan B Facility | March 2021 | March 2028 | $ | 1,429 | (b) | 5.29 | % | |||||||||||||||||||||||||
| Subsidiary Senior Unsecured Notes | June 2017 | June 2027 | $ | 750 | 4.75 | % | 4.90 | % | ||||||||||||||||||||||||
(a)The Term Loan A Facility and the Revolving Facility will mature on the earliest of (i) April 26, 2029, (ii) the date that is 91 days prior to the March 15, 2028 maturity of the Borrowers' existing Term Loan B Facility if more than $250 million of such Term Loan B remains outstanding as of such date or (iii) the date that is 91 days prior to the June 1, 2027 maturity of the Borrowers' existing Subsidiary Senior Unsecured Notes if more than $250 million of such Subsidiary Senior Unsecured Notes remains outstanding as of such date.
(b)The interest rates applicable to the Term Loan A Facility as well as the Revolving Facility range from 0.75% to 1.50% plus Secured Overnight Financing Rate ("SOFR") or from 0.00% to 0.50% plus the Base Rate (as defined in the Credit Agreement), at the Borrowers’ election, based upon the total leverage ratio (as defined in the Credit Agreement). As of December 31, 2025, the interest rate spreads on the SOFR and Base Rate applicable to both our Term Loan A Facility and borrowings under the Revolving Facility were 0.75% and 0.00%, respectively.
The interest rates applicable to the Term Loan B Facility are 1.75% plus SOFR or 0.75% plus the Base Rate, at the Borrowers’ election.
(c)Includes the effects of the amortization of any discount and debt issuance costs as well as the impact of the interest rate swaps on the Term Loan A and Term Loan B Facilities (see Note 13). The effective rates related to our Term Loan A and B Facilities are based on SOFR-based interest rates at December 31, 2025.
The Term Loan A Facility is subject to quarterly amortization payments in an amount equal to 0.625% of the principal amount of the facility as of the issuance date of $500 million. The Term Loan A Facility quarterly amortization payments increase to 1.25% of the principal amount of the facility as of the issuance date, beginning with the third quarter of 2027.
The Term Loan B Facility is subject to quarterly amortization payments in an amount equal to 0.25% of the principal amount of the facility as of the issuance date of $1.5 billion, with the balance payable at maturity on March 15, 2028.
The Credit Agreement is unconditionally guaranteed by the Company and certain of the Borrowers’ principal domestic subsidiaries and excludes Taco Bell Funding LLC and its special purpose, wholly-owned subsidiaries (see above). The Credit Agreement is also secured by first priority liens on substantially all assets of the Borrowers and each subsidiary guarantor, excluding the stock of certain subsidiaries and certain real property, and subject to other customary exceptions.
The Credit Agreement is subject to certain mandatory prepayments in the event certain covenants are not met, including an amount equal to 50% of excess cash flow (as defined in the Credit Agreement) on an annual basis and the proceeds of certain asset sales, casualty events and issuances of indebtedness, subject to customary exceptions and reinvestment rights.
The Credit Agreement's covenants include two financial maintenance covenants which require the Borrowers to maintain a total leverage ratio (defined as the ratio of Consolidated Total Debt to Consolidated EBITDA (as these terms are defined in the Credit Agreement)) of 5.0:1 or less and a fixed charge coverage ratio (defined as the ratio of EBITDA minus capital expenditures to fixed charges (inclusive of rental expense and scheduled amortization)) of at least 1.5:1, each as of the last day of each fiscal quarter. The Credit Agreement includes other affirmative and negative covenants and events of default that are customary for facilities of this type. The Credit Agreement contains, among other things, limitations on certain additional
indebtedness and liens, and certain other transactions specified in the agreement. We were in compliance with all debt covenants as of December 31, 2025.
The Subsidiary Senior Unsecured Notes are guaranteed on a senior unsecured basis by (i) the Company, (ii) the Specified Guarantors (as defined in the Credit Agreement) and (iii) by each of the Borrower’s and the Specified Guarantors’ domestic subsidiaries that guarantees the Borrower’s obligations under the Credit Agreement, except for any of the Company’s foreign subsidiaries. The indenture governing the Subsidiary Senior Unsecured Notes contains covenants and events of default that are customary for debt securities of this type. We were in compliance with all debt covenants as of December 31, 2025.
YUM Senior Unsecured Notes
The majority of our remaining long-term debt primarily comprises YUM Senior Unsecured Notes. The following table summarizes all YUM Senior Unsecured Notes issued that remain outstanding at December 31, 2025:
| Interest Rate | ||||||||||||||||||||||||||
| Issuance Date | Maturity Date | Principal Amount (in millions) | Stated | Effective(a) | ||||||||||||||||||||||
| October 2007 | November 2037 | $ | 325 | 6.88 | % | 7.45 | % | |||||||||||||||||||
| October 2013 | November 2043 | $ | 275 | 5.35 | % | 5.42 | % | |||||||||||||||||||
| September 2019 | January 2030 | $ | 800 | 4.75 | % | 4.90 | % | |||||||||||||||||||
| September 2020 | March 2031 | $ | 1,050 | 3.63 | % | 3.77 | % | |||||||||||||||||||
| April 2021 | January 2032 | $ | 1,100 | 4.63 | % | 4.77 | % | |||||||||||||||||||
| April 2022 | April 2032 | $ | 1,000 | 5.38 | % | 5.53 | % | |||||||||||||||||||
(a)Includes the effects of the amortization of any (1) premium or discount; (2) debt issuance costs; and (3) gain or loss upon settlement of related treasury locks and forward starting interest rate swaps utilized to hedge the interest rate risk prior to debt issuance.
The YUM Senior Unsecured Notes represent senior, unsecured obligations and rank equally in right of payment with all of our existing and future unsecured unsubordinated indebtedness. Our YUM Senior Unsecured Notes contain covenants and events of default that are customary for debt securities of this type, including cross-default provisions whereby the acceleration of the maturity of any of our indebtedness in a principal amount in excess of $50 million ($100 million or more in the case of the YUM Senior Unsecured Notes issued in 2019 and subsequent years) will constitute a default under the YUM Senior Unsecured Notes unless such indebtedness is discharged, or the acceleration of the maturity of that indebtedness is annulled, within 30 days after notice.
The annual maturities of all Short-term borrowings and Long-term debt as of December 31, 2025, excluding finance lease obligations of $148 million and debt issuance costs and discounts of $69 million are as follows:
| Year ended: | |||||
| 2026 | $ | 28 | |||
| 2027 | 1,668 | ||||
| 2028 | 2,019 | ||||
| 2029 | 1,327 | ||||
| 2030 | 1,800 | ||||
| Thereafter | 4,987 | ||||
| Total | $ | 11,828 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 16, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.