Moody's downgrades Agrokor

Moody's Investors Service said it downgraded the corporate family rating of Croatia-based Agrokor DD to B2 from B1 and its €230 million senior notes due 2007 to B2 from B1. This concludes the rating review begun on Oct. 19.

The outlook is stable.

Moody's said the downgrade reflects the company's credit metrics, which have progressively weakened as a result of its acquisitive expansion strategy in recent years; the likelihood that free cash flow generation will be limited; the likelihood that Agrokor will face increasing competition in the hypermarket segment, an area in which it has a limited, albeit growing, presence; and the company's limited financial flexibility within the covenants of its existing bond.

The stable outlook reflects Moody's expectation that the company's future growth, mainly in retail, will be largely financed through internally generated cash flows, which would represent a significant slowdown in investments over recent years. The stable outlook further takes into account the stable growth outlook for the Croatian economy, which should provide the company with ongoing potential for organic growth.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.