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Morrisons is being dragged down by debt, credit rating agency warns

Morrisons is being weighed down by big debt-fuelled personal fairness deal, high credit rating agency warns

Morrisons is struggling beneath the burden of debt from its personal fairness takeover, a credit rating agency has warned.

The grocery store was slapped with a ‘speculative’ debt rating by Fitch, which signifies ‘an elevated vulnerability to default threat’. 

The agency warned Morrisons’ rating could be even decrease have been it not for the grocery store’s robust administration group and profitability.

Debt fears: Morrisons was slapped with a 'speculative' debt rating by Fitch, which indicates 'an elevated vulnerability to default risk'

Debt fears: Morrisons was slapped with a ‘speculative’ debt rating by Fitch, which signifies ‘an elevated vulnerability to default threat’

The warning was echoed by rival rankings agency Moody’s because it reduce Morrisons’ credit rating.

Morrisons was taken over by New York-based personal fairness home Clayton, Dubilier & Rice in October for £7billion. The deal saddled it with £5.6billion of debt which it must service, resulting in fears it will likely be unable to maintain costs low.

Fitch’s rating will probably be an extra blow as a low credit rating makes it dearer for corporations to refinance and borrow. 

Morrisons and Asda, which additionally not too long ago fell into personal fairness fingers in a debt-fuelled takeover, have been falling behind rivals for the reason that offers. 

Figures from market analysis group Kantar present they dropping market share, elevating fears personal fairness barons won’t make good stewards.

They have been accused of elevating costs greater than rivals and have seen gross sales fall additional than different grocers.

Fitch analyst Sophie Coutaux mentioned: ‘We suppose the business is sturdy, the shops are nicely developed and invested. 

‘But to offset this, the leverage is very excessive for the rating… even incompatible with the rating.’

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