// Morrisons credit rating is downgraded by Moody’s
// The outlook for Morrisons’ ability to repay its £7.5bn debts had changed to negative from stable
Morrisons has seen a downgrade in its credit rating after recording a dip in sales and profits.
Credit rating agency Moody’s said the outlook for Morrisons’ ability to repay its £7.5bn of debts had changed to negative from stable.
The grocer‘s existing junk rating knocked down by one point, from B1 to B2, implying higher risk.
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Moody’s said the downgrade came as a result of “aggressive financial strategy, high leverage” and private equity ownership.
The downgrade was as a result of lower than expected profits for 2022, which meant the retailer’s debts now stand at 9.1 times underlying profits against the credit rating agency’s expectation of 6.5 times.
Moody’s said the outlook was negative as Morrisons’ debt to profits ratio put it close to a further downgrade.
In 2021, Morrisons was taken private following a £7bn takeover by US private equity firm CD&R. It lost its spot as the UK’s fourth-largest supermarket to Aldi last year after underlying profits fell 15% to £828m in the year ending 30 October.