Fitch rates Cencosud notes BBB-

Fitch Ratings said it assigned an expected senior unsecured rating of BBB-(EXP) to Cencosud SA's proposed senior unsecured notes of $850 million.

The unsecured notes are unconditionally guaranteed by the majority-owned Cencosud Retail SA.

Proceeds will be used to repay existing bank and bond debt (including the tender offer of the 2021 and 2023 notes), extending the company's debt maturity profile.

Fitch said the ratings reflect Cencosud's strong business profile as a geographically diversified, multi-format retailer in South America. It enjoys critical size in the food segment and benefits from a significant presence in the non-food retail segment.

The company's stable EBITDA margin and high level of unencumbered assets related to its real estate segment also are viewed positively.

Constraining factors include its high exposure to Argentina (26% of adjusted EBITDA) and the poor performance by its operations in Brazil and low margin in Colombia, the agency explained.

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