Moody’s downgrades Debenhams, warning outlook remains ‘negative’
Troubled retailer Debenhams suffered a fresh blow this afternoon after being downgraded by credit ratings agency Moody’s.
Read more: Sports Direct calls on Debenhams investors to protest against finance deal
The department store chain’s rating has been cut from Caa1 to Ca, with Moody’s saying that the group's outlook remained "negative".
"We have downgraded Debenhams' ratings as a balance sheet restructuring involving losses for financial creditors looks inevitable. Revenue and profitability continue to fall, and plans to shrink rental costs won't be enough to repair the retailer's capital structure, with a debt to equity swap now a likely element of any solution," said David Beadle, a Moody's vice president and senior credit officer.
He added: "Today's downgrade reflects the likelihood that Debenhams will seek to restructure its balance sheet in a way that leads to losses for some of the company's financial creditors."
The move comes a week after Debenhams agreed a £200m refinancing rescue deal with lenders in a bid to gain more time to slash costs and cut the size of its estate.
Read more: Debenhams completes £200m refinancing deal with lenders
Last week Mike Ashley’s Sports Direct, which controls a near 30 per cent holding in the business, also said it was considering making an offer for the firm, adding that it had been contacted by other shareholders expressing their support to the retail tycoon as chief executive of the group.