Marks & Spencer suffers credit rating downgrade ahead of its full-year results

The British retailer will unveil its full-year results on Wednesday, with the retailer coming under scrutiny for its Covid-19 response after it joins list of ‘junk’ investments by Standard & Poor’s.SharesRetailMarks & SpencerMorgan StanleyUnited Kingdo

Marks & Spencer (M&S) will unveil its full-year results on Wednesday, with the retailer coming under scrutiny for its Covid-19 response after joining list of ‘junk’ investments by ratings agency Standard & Poor’s (S&P).

The British retailer isn’t alone on S&P’s ever-growing list of companies deemed risky for lenders, with the ratings agency stripping 24 companies of their investment grade status in 2020 amid the economic fallout from the virus.

In fact, the agency believes that it will likely be forced to downgrade as many as 111 companies to junk status this year, including the likes of British Airways, Virgin Money, ITV and fellow retailer Next.

Since the downgrade, M&S has a credit rating of BB+ which will likely increase its cost of borrowing, putting added pressure on the retailer amid a challenging trading environment.

The company’s balance sheet is also not on the most secure footing, with M&S holding around £1.65 billion worth of debt on its books.

Investors are eager for an update on the company’s performance on Wednesday and what steps its management will take to strengthen the financial well-being of the company.

Aaran Fronda | Financial writer, London | Tuesday 19 May 2020 16:51

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