Moody’s applies Ba3 to Ocado, notes

Moody's Investors Service said it assigned a Ba3 corporate family rating and Ba3-PD probability of default rating to Ocado Group plc.

Concurrently, the agency assigned a Ba3 instrument rating to the £200 million senior secured notes due 2024 planned to be issued by the company.

The outlook is stable.

Ocado will use the proceeds to repay the current drawings under its revolving credit facility, certain finance leases, and transaction fees, with the balance of more than £100 million available for general corporate purposes and earmarked to support the company's planned capex requirements. Alongside the bond issue the refinancing which will include amendments to the company's revolving credit facility, notably a revised limit of £150 million and a maturity in 2022.

Moody’s said the Ba3 corporate family rating reflects Ocado's: (a) Strong growth in the expanding online segment of the broader mature grocery market; (b) reputation for high levels of customer service and quality; (c) online only model provides operational advantages versus traditional grocers, particularly for online order fulfilment; and (d) the support provided by the capital structure to enable the company to fund planned high capex requirements.

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