Moody's downgrades Morrisons

Moody's Investors Service said it assigned a corporate family rating of B1 and a B1-PD probability of default rating to Market Holdco 3 Ltd., a holding company formed to acquire Wm Morrison Supermarkets plc by Clayton Dubilier & Rice, LLC.

This action concludes the review for downgrade started on July 7, and downgraded and further extended on Dec. 13, Moody’s said. The outlook on all ratings, except on Safeway Ltd.'s ratings which have been withdrawn, is stable.

“The effective downgrade of Morrisons' rating to B1 from Ba1 was triggered by the completion of review for downgrade following the acquisition of the entirety of the company by CD&R for an enterprise value of £9.8 billion. The acquisition was financed through a combination of equity capital, including ordinary and preference shares, and bridge debt facilities that are expected to be refinanced through long term debt,” Moody’s said in a press release.

The agency withdrew the Ba1 CFR and Ba1-PD PDR of Wm Morrison Supermarkets and the (P)Ba1 backed senior unsecured MTN program of Safeway.

Moody's also dropped to (P)B1 from the (P)Ba1 backed senior unsecured MTN program, and to B1 from the Ba1 backed senior unsecured ratings of all the bonds issued under the program by Wm Morrison Supermarkets.

“The rating agency understands that around £82 million of the bonds remain outstanding following the completion of a tender offer launched by CD&R. The B1 rating of these notes is based on the successful completion of the envisaged refinancing,” Moody’s said.

The deal is subject to regulatory approval and is expected to close in the second half of 2022.

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