Fitch: Maxeda may weaken

Fitch Ratings said the sale of Maxeda's HEMA general merchandise store to Lion Capital could weaken the business profile of the group, although the impact on its credit quality is unclear due to the lack of visibility on the future financial structure.

Although Maxeda's strong DIY operations are expected to continue to drive the group's credit quality, Fitch recognizes the greater exposure to the more volatile apparel business and less profitable department store formats as a result of the HEMA sale, the agency said.

Given the perceived increased business risk, Fitch said it would require a lease-adjusted net leverage of below 5x to maintain the issuer default rating at the current BB- level with stable outlook. A lease-adjusted net leverage ratio higher than that could cause the rating to be downgraded by at least one notch. The high-yield bonds, which will be redeemed in July, also are rated BB-.

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