S&P trims Future Retail

S&P said it lowered its preliminary long-term issuer credit rating on Future Retail Ltd. and the preliminary long-term issue rating on the company's $500 million of senior secured notes to B- from BB-. At the same time, the agency placed the ratings on CreditWatch with negative implications.

“In our view, Future Retail is now exposed to a higher event risk triggered by a potential change-of-control covenant for its $500 million secured notes issuance. The covenant requires the company's promoter shareholders – Future Corporate Resources Pvt. Ltd. (FCRPL) and Future Coupons Pvt. Ltd. – to maintain a 26% ownership in Future Retail. As of March 24, 2020, certain lenders have invoked the pledge on encumbered shares (8% of total shares),” S&P said in a press release.

The CreditWatch placement reflects growing risks on Future Retail's liquidity position, its access to banking and capital markets, and ability to roll over credit lines following the credit-negative development at the group level.

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