LONDON (Alliance News) - Moody's Investors Service on Monday assigned a first time corporate family credit rating of Ba3 and probability of default rating of Ba3-PD to FTSE 250-listed B&M European Value Retail SA.
Additionally, Moody's assigned a (P)Ba3 instrument rating to the GBP250 million senior secured notes due 2022 to be issued by the company. The outlook on all the ratings is stable.
Moody's said the Ba3 corporate family rating "reflects the strengths of B&M's business model as evidenced by its rapid growth over recent years in a very competitive market place, its solid margins and good free cash flow generation before shareholder distributions."
In particular, Moody's highlighted B&M's ability to compete with much larger rivals by carefully selecting secondary brand products, private label goods, and size and flavour variations of primary brands.
"A more narrow selection of products across a wide range of groceries and general merchandise compared to traditional retailers also enables the company to quickly adapt to competition and changing customer preference," Moody's said.
However, the rating also reflects B&M's small but growing size relative to traditional retailers, its UK concentration, and somewhat leveraged capital structure.
The stable outlook is a result of Moody's expectation of continued solid growth from new store openings. "The rating and outlook also incorporate Moody's expectation that leverage will not materially increase from current levels and do not factor in any larger debt-funded acquisitions," Moody's said.
Shares in B&M were down 0.4% at 297.90 pence Monday afternoon.
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