Moody’s drops Matalan, notes

Moody's Investors Service said it downgraded Missouri TopCo Ltd.’s (Matalan) corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD.

Concurrently, the agency downgraded the rating of £342 million senior secured notes due 2019 issued by Matalan Finance plc to B3 from B2 and the rating of £150 million second-lien notes due 2020, also issued by Matalan Finance, to Caa3 from Caa2.

The outlook was revised to stable from negative.

Moody’s said the downgrade reflects its concerns about the company's ability to grow profitability back to the levels it consistently achieved between its fiscal years ended February 2013 (FY12/13) and FY14/15.

While the agency recognizes that there is scope to sustain the recovery in profitability recorded during the first half of its current fiscal year, FY16/17, into the second half, it considers further improvement into FY17/18 will be more challenging.

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