Moody’s lowers Morrisons, Safeway

Moody's Investors Service said it downgraded the long-term issuer and senior unsecured ratings of Wm Morrison Supermarkets plc and its guaranteed subsidiary Safeway Ltd. to Baa3/provisional Baa3 from Baa2/provisional Baa2.

Concurrently, the agency downgraded Morrisons’ short-term ratings to Prime-3/provisional Prime-3 from Prime-2/provisional Prime-2.

The outlook is stable.

"Today's rating action primarily reflects the impact of structural changes in the U.K. grocery sector, particularly the ongoing shift of consumers to discounters, convenience stores and online retailers, which has caused Morrisons' earnings to contract beyond our previous expectations," Sven Reinke, Moody’s vice president, senior credit officer and lead analyst for Morrisons, said in a news release.

"While Morrisons has made substantial progress in reducing its debt, we expect the company's credit metrics to remain outside the requirements of a Baa2 rating for an extended period of time."

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