S&P downgrades Hema

Standard & Poor’s said it lowered the long-term corporate credit rating on Hema BV to B from B+.

The outlook is stable.

The agency also said it lowered the ratings on the company’s €80 million super senior revolving credit facility due 2018 to BB from BB+ and left the recovery rating unchanged at 1+.

S&P also said it lowered to B from B+ the ratings on the €250 million senior secured floating-rate notes and €315 million senior secured fixed-rate notes, both due 2019.

The recovery ratings on these notes are unchanged at 3.

The agency also said it lowered to CCC+ from B- the rating on the €150 million senior unsecured notes due 2019 and left the recovery rating unchanged at 6. The notes were issued by special-purpose vehicles HEMA Bondco I BV and HEMA Bondco II BV, both owned by Dutch Lion BV, Hema’s parent company.

The proceeds of the notes were lent on to Hema, S&P said.

The downgrades reflect Hema’s weaker-than-expected operating performance during the previous year as the Dutch economy remained challenging, the agency said, and competition from discount retailers continued to strengthen.

The ratings are primarily constrained by the company’s highly leveraged financial risk profile and the company’s private equity ownership, S&P said.

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