Moody's cuts Go-Ahead to junk

Moody’s Investors Service said it lowered the rating of £250 million of backed senior unsecured notes due July 2024 of the Go-Ahead Group plc to Ba1 from Baa3 and maintained the rating on review for downgrade. Moody's also assigned a corporate family rating of Ba1 and a probability of default rating of Ba1-PD to Go-Ahead. All ratings are on review for downgrade.

The downgrade follows Dec. 9 that its audited financials for the fiscal year ending on July 3, will not be published until the end of January, the agency said. It also reflects the announcement that the accounting and legal independent review regarding the Southern franchise found London & South Eastern Railway Ltd., 65% owned by Go-Ahead, made serious errors concerning its engagement with the Department for Transport.

Moody’s noted this delay is the second time that the publication of the audited financial statements has been postponed and is not commensurate with an investment-grade rating.

“Based on public disclosure, the delay is due to the complex nature of the independent legal and accounting report which the auditor (Deloitte) needs to review. As a result of the delay in the publication of financials, Moody's understand that Go-Ahead obtained waivers from its bank lenders for the requirement to publish its accounts within a specified period of time,” the agency said in a press release.

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