Moody's cuts Hypermarcas

Moody's Investors Service said it downgraded the global-scale corporate family and senior unsecured debt ratings of Hypermarcas SA to Ba3 from Ba2, along with its national scale ratings to A2.br from A1.br.

The outlook is stable.

The ratings affected by downgrade include the company's $750 million senior unsecured guaranteed notes due 2021.

The downgrade reflects the deterioration in Hypermarcas' credit metrics observed over the last few quarters, mainly due to high integration challenges following a significant number of large acquisitions and a change in the company's commercial policies, Moody's said.

In the second quarter of 2011, the company announced a change in policy with its wholesale clients by instituting more restrictive sales terms, the agency said.

This led to a destocking process that negatively impacted operating performance, Moody's said.

As a result, the company reduced its EBITDA guidance for the second time this year to BRL 700 million from BRL 900 million, the agency added.

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