Moody’s lowers Edcon, notes

Moody's Investors Service said it downgraded Edcon Holdings Ltd.’s global scale corporate family rating to Caa1 from B3, probability of default rating to Caa1-PD from B3-PD and senior unsecured notes to Caa3 from Caa2.

The agency also downgraded the senior secured notes issued by Edcon Ltd. to Caa1 from B3.

The outlooks are stable. This concludes the review for downgrade initiated on Oct. 21.

Moody’s said the downgrade was driven by its concerns about Edcon’s ability to proactively manage its debt profile and sustain current capital structure amid weak operating environment in South Africa. The agency projects only limited growth in earnings and expects that Edcon's leverage to remain elevated, with adjusted debt to EBITDA at or above 7.5 times in the next 12-18 months.

Edcon's management continues to execute strategies to deliver growth in earnings and cash flow generation. Given weak economic environment, Moody’s expects these measures will take time to have a meaningful positive impact on the financial metrics of the company.

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