UK Department Store Group Faces Challenges to Improve Credit Quality
- Debenhams ratings downgraded by Moody’s for the second time in two months
- Long-term corporate family rating downgraded to Caa1 from B2
- Probability of default rating downgraded to Caa1-PD from B2-PD
- Senior unsecured ratings on GBP200 million notes due in 2021 also downgraded to Caa1 from B2
- Outlook on the ratings remains stable
- Moody’s expects higher downside risk for Debenhams profitability during Christmas season
- Competitive environment highly challenging
- House of Fraser plans to keep more stores open than previously anticipated
- Debt facilities refinancing remains a challenge for Debenhams
Debenhams, the UK’s largest department store group, has faced another downgrade of its ratings by Moody’s Investors Service. The long-term corporate family rating (CFR) was lowered from B2 to Caa1, while the probability of default rating (PDR) was also downgraded from B2-PD to Caa1-PD. Additionally, the senior unsecured ratings on the GBP200 million notes due in 2021 were downgraded from B2 to Caa1. Despite these changes, Moody’s expects Debenhams to maintain stable profitability and adequate liquidity. However, the agency anticipates a higher risk for the company during the upcoming Christmas season due to the competitive environment. House of Fraser, which emerged from administration in August, plans to keep more stores open than initially planned, focusing on revitalizing its appeal to customers.
Factuality Level: 10
Factuality Justification: The article provides accurate information about Debenhams’ ratings downgrade by Moody’s, the reasons behind it, and quotes from a Moody’s analyst. It is objective and does not include irrelevant or sensational details, nor any personal perspective presented as fact.
Noise Level: 2
Noise Justification: The article provides relevant information about Debenhams’ downgrade by Moody’s and the challenges it faces in refinancing its debt facilities. It also mentions the competitive environment and expectations for profitability. However, it lacks a detailed analysis of long-term trends or possibilities, accountability, scientific rigor, intellectual honesty, staying on topic, evidence, actionable insights, and exploration of consequences.
Financial Relevance: Yes
Financial Markets Impacted: Debenhams, House of Fraser, department store industry
Financial Rating Justification: The article discusses the downgrading of Debenhams’ ratings by Moody’s and its impact on the company’s financial situation, as well as mentioning another competitor, House of Fraser, which may affect the overall department store industry.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the text.
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