Moody's gives Highland B2, notes B3

Moody's Investors Service said it assigned first-time corporate family and probability of default ratings of B2 to Highland Group Holdings Ltd.

The agency also said it assigned a provisional B3 to the proposed seven-year £250 million senior secured notes to be issued by a wholly-owned subsidiary, House of Fraser (Funding) plc.

The outlook is stable.

The ratings are supported by the group's excellent name recognition in its markets and unique business model, under which a significant portion of its sales are generated through concession contracts with more than 350 suppliers of premium brand names, the agency said.

Moody's said it believes this model mitigates the volatility in earnings from one year to the next.

But the agency also said the company is highly exposed to discretionary spending, which has been reflected in House of Fraser's own comparable sales in recent years.

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