// Ratings agency Fitch has downgraded Asda’s outlook from ‘stable’ to “negative”
// The credit firm said the £200 million borrowed by Asda to make the Co-op forecourt deal possible has left it with more debt than expected
Credit ratings agency Fitch has downgraded Asda’s credit rating from stable to negative due to the supermarket‘s growing debt pile after its £600 million purchase of Co-op‘s petrol forecourts.
The £200 million borrowed by Asda to make the deal to buy 129 Co-op petrol forecourt sites possible has left it with more debt than expected and Fitch also said the grocer would have lower expected earnings over the next two years.
Fitch set the grocer‘s debt at ‘BB-minus’, which could result in an ‘elevated’ risk of the business defaulting, adding that Asda would not likely return to a ‘stable’ level until 2024.
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Fitch slashed its forecast for Asda’s profit this year and said that Asda will make an £850million profit this year, down from an earlier prediction of £1.1billion.
An Asda spokesperson told This Is Money: “We remain focused on our long-term strategy to become the UK’s number-two grocery retailer by delivering value to customers and giving them more opportunities to shop with us. The acquisition of the Co-op sites gives us a meaningful position in a growing convenience market.”
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