Moody's cuts ASDA, rates notes Ba3

Moody's Investors Service said it downgraded the corporate family rating of Bellis Finco plc, a holding company formed to effect the acquisition of ASDA Group Ltd. to Ba3 from Ba2. Concurrently, the agency assigned a Ba3 rating to the planned equivalent £500 million of backed senior secured notes to be issued by Bellis Acquisition Co. plc, a fully-owned subsidiary of Bellis Finco.

Moody's also lowered Bellis' probability of default rating to Ba3-PD from Ba2-PD. The agency also cut to Ba3 from Ba2 the ratings of Bellis Acquisition Co. plc instruments, including the £195 million senior secured first-lien term loan A due August 2025, the €845 million senior secured first-lien term loan B due February 2026, the £2.25 billion backed senior secured notes due February 2026 and the £500 million senior secured first-lien revolving credit facility due August 2025.

Moody's downgraded to B2 from B1, Bellis Finco’s £500 million of backed senior unsecured notes due February 2027.

The downgrades reflect the company’s decision it will not sell its fuel stations to EG Group Ltd. as previously envisaged. “The decision not to proceed with the forecourt transaction will result in a £500 million additional gross debt compared to Moody's expectations at the time of the assignment of the first-time rating. Moody's estimate that the failure to complete the sale will result in higher leverage, measured in terms of Moody's adjusted gross debt to EBITDA, to initially increase to 5.9x as of June 30, 2021 compared to 5.2x previously expected,” the agency said in a press release.

The outlook remains stable.

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