S&P: Allied Domecq still on watch

Standard & Poor's said its BB senior unsecured debt ratings on Allied Domecq Ltd. (BB/positive/B), formerly Allied Domecq plc and related entities remain on CreditWatch with negative implications.

The agency said the senior unsecured debt ratings were originally placed on CreditWatch with negative implications on April 21, pending the possible resolution of subordination issues following the takeover of Allied by Pernod Ricard SA (BB/positive/B).

The BB/B corporate credit ratings on Allied remain aligned with those on its parent, Pernod, the agency noted.

"We expect Pernod's management to decide on the implementation of a valid remedy to the current structural subordination situation within one month," said S&P credit analyst Vincent Allilaire.

"This could be reached, for example, through the granting of a Pernod Ricard guarantee to Allied's remaining bondholders. Should no valid remedy be provided, Standard & Poor's will reflect the structural subordination of Allied's senior debt through a one notch downgrade, to BB-."

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