Moody's reviews Edcon for downgrade

Moody's Investors Service said it placed on review for downgrade Edcon Holdings Ltd.’s B3 global scale corporate family rating, B3-PD probability of default rating and Caa2 senior notes due 2019and Edcon Ltd.’s B3 senior secured notes due 2018.

The review for downgrade reflects Moody's concern over Edcon's ability to proactively manage its debt profile and sustain its current capital structure amid the weakening operating environment in South Africa. The agency said this reflects the company's failure to reduce leverage over the past few years, the uncertainty about the company's financial policy and near-term objectives and a weakening macroeconomic environment in South Africa that will constrain growth in the company's cash flows and the pace of its deleveraging going forward.

Moody's said it does, however, recognize Edcon's extended debt maturity profile and does not see a near-term payment default event risk over the next 12 to 18 months.

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