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S&P lifts Debenhams to stable
Standard & Poor’s said it revised the outlook on Debenhams plc to stable from negative.
The agency also said it affirmed the BB- corporate credit rating and senior issue-level ratings.
S&P also affirmed the issue and recovery ratings of BB- and 3 on the company’s £225 million 5 ¼% senior notes due 2021. The 3 recovery rating indicates 50% to 70% expected default recovery.
The agency said it believes Debenhams will continue to moderately improve its operating performance and is likely to maintain a resilient competitive position.
The outlook revision also considers an expectation that the group will continue to moderately improve its margins and free cash flow generation, S&P said.
The modest improvement in profitability, offset by continued capital investment, should result in the group’s leverage ratio trending down on a reported basis, the agency said.
With that said, leverage is expected to remain at more than 5x, after accounting for substantial operating lease commitments, S&P said.
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