S&P changes Walmart to negative

S&P said it revised the outlook on Walmart Inc. to negative from stable and affirmed the AA long-term corporate credit rating and all issue-level ratings.

Walmart announced it signed a definitive agreement to become the largest shareholder in Flipkart Group, one of India's largest e-commerce marketplaces, in a $16 billion deal that will be funded by newly-issued debt and cash.

The agency said it expects leverage to increase about a half turn more than previously projected for the coming fiscal year.

“The negative outlook reflects a view that as retail continues to rapidly move online globally, mature and historically brick-and-mortar focused Walmart will take on more business risk investing in mergers and acquisitions to grow its sector leadership, and more financial risk given increased adjusted debt levels,” S&P said in a news release.

The agency said the negative outlook also reflects an expectation that slower overall profit growth going forward will drive the company to continue to recycle assets as it is pursuing with Flipkart and Asda.

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