Fitch puts El Corte Ingles on watch

Fitch Ratings said it placed El Corte Ingles SA's long-term issuer default rating and senior unsecured rating of BB+ on rating watch negative.

“The RWN reflects the adverse impact of the coronavirus outbreak on ECI's financial profile and liquidity, given uncertainty regarding the length of the ongoing lockdown in Spain. Fitch assumes that the lockdown would remain in place until end-May 2020, which would lead to a sharp decline in non-food retail sales in 1QFY21 (financial year to February 2021), followed by a recovery from 2QFY21,” the agency said in a press release.

“We expect this to stress liquidity during 1QFY21 and cause ECI to fully draw down its €1.1 billion revolving credit facility (RCF), although we expect it to implement contingency measures. The RWN also reflects that post-crisis the financial profile expected by Fitch may be altered and no longer be in line with the BB+ rating,” Ftich said.

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