Moody’s downgrades Hema

Moody's Investors Service said it downgraded to Caa1 from B3 the corporate family rating of Hema BV.

Concurrently, the agency downgraded Hema's probability of default rating to Caa1-PD from B3-PD.

Moody's also downgraded to B3 from B2 the €600 million senior secured floating-rate notes due 2022 issued by Hema Bondco I BV and to Caa3 from Caa2 the €150 million senior notes due 2023 issued by Hema Bondco II BV.

The outlook remains negative.

“Our decision to downgrade Hema's ratings reflects our view that Hema's financial performance and credit metrics will remain under pressure over the next 12 to 18 months,” Francesco Bozzano, a Moody's assistant vice president, analyst and lead analyst for the company, said in a news release.

“At this stage it's unclear if, and when the strategic initiatives the company are implementing will improve profitability. In the meantime, competition is intense and we expect the retail environment to remain challenging.”

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