Moody's pares UNFI

Moody's Ratings said it downgraded the senior unsecured global notes of United Natural Foods, Inc. (UNFI) to Caa2 from Caa1, its corporate family rating to B3 from B2 and its probability of default rating to B3-PD from B2-PD.

The agency said it affirmed the B3 rating on UNFI's senior secured term loan. The company's speculative grade liquidity rating is unchanged at SGL-3.

“The downgrade of the ratings reflects UNFI's weaker credit metrics with high financial leverage, very weak interest coverage and negative free cash flow. Moody's expects UNFI's debt to EBITDA to be 5.8x and EBITA/interest at 1x over the next 12 months.

“The company's profitability is expected to continue to be pressured by elevated operating costs from supply chain disruptions, reduced volumes from retail grocery customers, and high labor costs. The affirmation of the B3 on the term loan reflects the sizable level of asset coverage provided by the real estate pledged to the term loan,” the agency said in a statement.

The outlook remains stable.

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