Fitch might lower Whitbread

Fitch Ratings said it placed Whitbread plc's long-term issuer default rating of BBB, short-term issuer default rating of F2 and senior unsecured rating of BBB on rating watch negative.

The action reflects the announcement made by Whitbread in April that it plans to separate Costa, its coffee chain business, from Whitbread within a 24-month horizon, the agency said.

Fitch said that in its view the demerger would increase the business risk of Whitbread by reducing its scale and business diversification while moderately impacting its leverage metrics, assuming all the debt remains borne by Whitbread after the demerger.

The rating watch will be resolved when the demerger is certain to proceed, and the new capital structure of the remaining Whitbread entity has been disclosed, the agency said.

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