Fitch lowers Shop Direct, notes to B

Fitch Ratings said it downgraded Shop Direct Ltd.’s long-term issuer default rating to B from B+.

The outlook is negative.

The agency also downgraded Shop Direct Funding plc's senior secured notes to B from B+ with a recovery rating of RR4 (38%).

Fitch said the downgrade reflects the higher credit risk profile arising from unexpected additional PPI provisioning, which could lead to higher cash payments if materialized over the next 18 months.

This comes at a time of high shareholder distributions as revealed in incremental cash outflows to outside the restricted group in year-to-date March 2018 (9 months), albeit permitted by the terms of the bond documentation, the agency noted.

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