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S&P downgrades E-Mart
Standard & Poor’s said it lowered its long-term corporate credit rating on E-Mart Inc. to BBB from BBB+. The outlook is stable.
“The downgrade reflects our expectation that E-Mart’s aggressive capital expenditures combined with weak domestic consumption will erode measures of the company’s creditworthiness over the next one to two years,” said S&P credit analyst JunHong Park in a news release.
“During this period, we expect the company to maintain heavy capital spending to grow new businesses such as multipurpose shopping malls, leading to negative free operating cash flow and a substantial increase in debt. We estimate the company’s debt to EBITDA after our adjustments will remain weak at about 3.8x-4.2x over the next 12 months, compared with 3.2x in 2013.”
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