// Ratings agency Fitch has downgraded Asda’s outlook from ‘stable’ to “negative”
// The credit firm said the £200 million borrowed by Asda to make the Co-op forecourt deal possible has left it with more debt than expected
A leading credit agency has downgraded Asda’s credit rating from stable to negative following the supermarket‘s debts after its £600 million purchase of Co-op‘s petrol forecourts.
This Is Money reported that the agency Fitch said the £200 million borrowed by Asda to make the deal possible has left it with more debt than expected.
It has also set the grocer‘s debt at ‘BB-minus’, which could result in an ‘elevated’ risk of the business defaulting, adding that Asda would not likely return to a ‘stable’ level until 2024.
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Fitch also slashed its forecast for Asda’s profit this year and said that Asda will make an £850million profit this year, down from an earlier prediction of £1.1billion.
An Asda spokesperson told This Is Money: “We remain focused on our long-term strategy to become the UK’s number-two grocery retailer by delivering value to customers and giving them more opportunities to shop with us. The acquisition of the Co-op sites gives us a meaningful position in a growing convenience market.”
Last month Co-op confirmed it would be selling its petrol forecourt business to Asda for an ‘enterprise value’ of £600 million, including 129 petrol forecourt sites, spread across the UK – representing 5% of Co-op’s retail estate of 2,564 stores.
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