17th Jan 2019 06:58
LONDON (Alliance News) - Moody's Investors Service on Wednesday changed Debenhams PLC's outlook to negative from stable as it believes creditors may incur risks lending to the struggling department store chain.
Moody's affirmed Debenhams Caa1 corporate family rating, Caa1-PD probability of default rating and Caa1 rating on the GBP200 million loan notes due 2021.
"Today's change in outlook reflects our view that there is a risk that refinancing negotiations may not result in a timely and cost effective solution and thus the process could ultimately culminate in losses for financial creditors," David Beadle, a Moody's vice president and lead analyst for Debenhams, said.
"However, notwithstanding this and the company's elevated leverage we continue to view Debenhams liquidity profile as adequate for the time being," he added.
Last week, alongside its Christmas trading sale figures, Debenhams said it entered talks with lenders regarding refinancing of GBP320 million loan notes due to mature in 2020.
The retailer said "constructive" talks have begun with lenders, and options include bringing new sources of funding.
Meanwhile, its sales continued to decline in the 18-week period to January 5, with like-for-like sales down 5.7%.
The rating agency on Wednesday added that it believes Debenhams' prospects of "access to fresh capital" to have been hindered by the significant fall its share price, down 89% in the last year.
However, Moody's explained that in the event of a successful refinancing the outlook on Debenhams would be upgraded again.
Related Shares:
Debenhams