10th Mar 2020 17:48
(Alliance News) - Provident Financial PLC on Tuesday said the lowering of its credit rating by Fitch will result in an increase in the funding rate on its revolving bank facility and senior bonds.
Fitch on Tuesday lowered the sub-prime lender's credit rating to BB+ with a stable outlook from BBB- with a negative outlook.
Provident Financial said the downgrade will result in an increase in funding costs of around GBP3 million in 2020.
"The downgrade to the group's credit rating by Fitch reflects the slower than anticipated recovery of the home credit business since the group was put on negative ratings watch in March 2018," said Chief Financial Officer Simon Thomas.
"We continue to expect CCD will deliver a break-even result in 2020, before taking account of the increase in the group's funding rate. We remain confident the business is capable of delivering the group's target returns in the medium term, particularly given the ongoing market disruption from tougher regulation," he added.
Provident does not expect the downgrade to have a significant impact on its ability to secure new funding at competitive rates, it said.
The stock closed 3.8% lower at 340.00 pence each on Tuesday in London.
By Ife Taiwo; [email protected]
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