Moody's lowers Debenhams

Moody's Investors Service said it downgraded Debenhams plc's long-term corporate family rating to B1 from Ba3, along with the probability of default rating to B1-PD from Ba3-PD and senior unsecured ratings on the £200 million notes due in 2021 to B1 from Ba3.

The outlook is stable.

The ratings reflect expectations that credit metrics will deteriorate to a level not commensurate with the Ba3 rating, Moody's said.

The downgrades also consider the increased execution risk behind the new strategy as a result of ongoing difficult trading conditions in the United Kingdom, the agency said.

The ratings reflect a highly competitive and promotional environment in the United Kingdom, negative sales developments and fashion risk mitigated by product diversification, Moody's said.

The ratings also consider its high operating and financial leverage owing to long operating leases and weakened cash flow generation, the agency said.

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