Fitch lowers Golden Eagle view to negative

Fitch Ratings said it revised the outlook on Golden Eagle Retail Group Ltd.’s to negative from stable and affirmed its issuer default and senior unsecured ratings at BBB-.

The outlook revision reflects the company’s escalating leverage ratio arising from the about ¥1.3 billion acquisition of a 51% equity interest in the Suzhou Orient Gate project, the agency said.

Fitch said it estimates that Golden Eagle’s payables adjusted net-leverage ratio will rise to more than 3.5x following the acquisition and remain at more than 3x unless the company reduces planned capital expenditure meaningfully.

Golden Eagle’s ability to deleverage also will depend on its ability to sustain strong sales in its core department store business, which continues to be pressured by weak industry sentiment, the agency added.

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