Moody’s lowers Signet UK to stable

Moody's Investors Service said it revised Signet UK Finance plc's outlook to negative from stable and affirmed all other ratings, including the Baa3 senior unsecured rating.

Signet UK is an indirect subsidiary of Signet Jewelers Ltd.

Moody’s said the change in outlook was prompted by the company's announcement of the issuance of $625 million of convertible preferred stock to repurchase common shares.

The outlook change reflects the agency’s view that issuance of the $625 million convertible preferred to a private equity investor, Leonard Green & Partners, LP, increases the risk associated with the company's financial policy.

"Although we recognize Signet's commitment to maintain an investment grade profile rating with a publicly stated leverage target of 3.5x (per the company's definition), a private equity investment and representation at the board level could support a more aggressive financial profile. Our Baa3 rating and credit outlook assumes the current structure of the credit business, as it remains under strategic review by the company,” Moody’s said.

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