Moody’s downgrades PetSmart, debt

Moody's Investors Service said it downgraded PetSmart, Inc.'s corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD, senior secured term loan and senior secured notes to B1 from Ba3 and senior unsecured notes to Caa1 from B3.

The outlook remains negative.

"The downgrade reflects PetSmart's weak operating performance, especially in its core retail business, which has been below our expectations and we therefore do not expect its credit metrics, already weakened by the recent Chewy acquisition, to demonstrate any meaningful improvement in the next 12 months," Moody's vice president Mickey Chadha said in a news release.

"Like most high growth pure play online retailers we estimate Chewy will remain EBITDA negative for at least the next 12 months and our negative outlook reflects the uncertainty around PetSmart's ability to reduce leverage to below 6.5 times considering the execution and integration risks associated with the Chewy acquisition and the increasingly competitive business environment."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.