Fitch assigns Bellis Finco BB-

Fitch Ratings said it assigned Bellis Finco plc (ASDA Group Ltd.) an expected long-term issuer default rating of BB- with a stable outlook. Fitch also gave expected senior secured instrument ratings of BB/RR2 to £3.185 billion of debt to be issued by Bellis Acquisition Co. plc, and expected second-lien instrument ratings of B+/RR5 to £500 million debt to be issued by Bellis Finco.

“The IDR reflects ASDA’s market position and scale in a resilient, but competitive U.K. food retail sector. The ratings recognize its solid profitability and strong free cash flow cash (FCF) generation, which is comparable with Fitch-rated peers. We recognize some inherent execution risks in ASDA repositioning itself in the market and expect management to continue managing cost savings well, as it has done in the past. We view Walmart, Inc.’s (Walmart, AA/Stable) continued involvement as a positive factor, considering ASDA’s reliance on its technology and the benefits from its purchasing power in non-food,” Fitch said in a press release.

The outlook is driven by Fitch’s expectation of steady operating and financial performance and is predicated on maintaining financial policies consistent with gradually declining leverage and keeping to governance principles that demonstrate adequate alignment of interests between shareholders and creditors, the agency said.

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