Fitch lowers Signet Jewelers to junk

Fitch Ratings said it downgraded the long-term issuer default rating for Signet Jewelers Ltd. to BB+ from BBB-.

The outlook is stable.

The downgrades are due to weakening operating trends across Signet's brands, coupled with the news of a $625 million preferred equity investment by Leonard Green & Partners, which is treated as debt, Fitch explained.

Together, these issues are expected to elevate Signet's leverage profile over the medium term, the agency said.

The ratings continue to reflect Signet's leading share in the specialty jewelry market in the United States, as well as the United Kingdom and Canada, Fitch said.

The ratings also considers EBITDA upside from both long term sales growth opportunities and expense synergies related to the company's 2014 acquisition of Zale, the agency said.

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