S&P cuts Allied Domecq to junk

Standard & Poor's said it removed from CreditWatch with negative implications and lowered its corporate credit ratings on Allied Domecq plc to BB/B from BBB+/A-2 following completion of the group's takeover by Pernod Ricard SA (Pernod; BB/positive/B).

The outlook is positive.

At the same time, S&P lowered its senior unsecured debt ratings on Allied to BB from BBB+ but kept the ratings on CreditWatch with negative implications, pending the possible resolution of subordination issues.

S&P said that following the acquisition by Pernod, the ratings on Allied reflect the highly leveraged capital structure of the combined group in addition to potential integration issues. The ratings benefit, however, from the combined group's superior business profile and the expected immediate focus on deleveraging.

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