Moody's cuts Enterprise Inns

Moody's Investors Service said it downgraded the corporate family rating of Enterprise Inns plc to Ba2 from Ba1 and its £275 million senior secured notes due 2031 to Baa3 from Baa2, and assigned a probability-of-default rating of Ba3.

The outlook is negative.

According to Moody's, the downgrade reflects market conditions and underlying industry fundamentals, which augur for worsening performance.

The Ba2 corporate family rating reflects the company's active management of a portfolio of 7,800 freehold public houses, the agency said.

The large pub estate provides diversification and stability to its revenues, underpinned by long-term leases, low operational gearing and beer volumes, which have historically been predictable but in structural decline, the agency noted.

Ratings could be downgraded if the parent company's adjusted ratio of net debt to recurring EBITDA were to rise above 6x or its adjusted ratio of net debt to recurring EBITDA above 7.5x.

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