Casino has had its credit rating cut to junk by Standard & Poor’s, the latest development in a run of bad news for the French supermarket group.
S&P lowered its long-term debt rating one notch to BB+, it announced on Monday.
Casino moved quickly to reassure investors, saying in a statement published shortly after that:
The downgrade of the Group’s credit rating will result in a slight increase in the cost of its bond debt (impact estimated at less than €20m before tax in 2016 excluding future bond buybacks already mentioned by Casino) and has no effect on Casino’s liquidity.
Before taking into account the deleveraging plan, Casino had at end 2015 a gross cash position of €1.7bn and €3.9bn of undrawn confirmed credit lines, which availability is fully independent from the S&P rating.
As well as operating in the fiercely competitive French retail market Casino is exposed to the economic downturn in recession-hit Brazil, with its sales there falling as currency fluctuations bite.
It is also in the midst of scaling back its activities in Thailand and Vietnam.
The group recently came under attack from Muddy Waters, which called the French retailer one of the most “overvalued” companies it had ever come across. Muddy Waters – which was founded by US investor Carson Block and is well known for its detailed attacks – also said Casino’s statements were “literally meaningless” when it came to trying to understand the company, claims which Casino rejected.