Moody' affirms Hornbach Baumarkt

Moody's Investors Service said it affirmed Hornbach Baumarkt AG's Ba2 corporate family rating and Ba3 €250 million senior unsecured notes due 2014.

The outlook is stable.

The affirmation reflects the company's good operating performance for the year to date and Moody's expectation that financial leverage should continue to improve going forward.

The agency said Hornbach's corporate family rating remains at the low end its rating category and that this reflects the company's mix of solid business characteristics, including good potential for international growth, offset by credit metrics that continue to lag the current rating category and its exposure to the continuing difficult retail market condition in Germany.

The affirmation takes into account the fact that Hornbach's cash flows have temporarily benefited from a lower-than-expected capital expenditure program for the year to date, primarily due to a postponement of new store openings into the next financial year. However, Moody's said it expects expenditures to roll-over into future years and, as a result, there is low expectation of any substantial reduction in the absolute amount of lease adjusted debt.

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