Brushoff for Moody's

Edcon, SA's largest non-food retailer which delisted last year under the Bain private equity umbrella, was none too charmed when Moody's Investor Services published a credit opinion on 1 August outlining the macro economic outlook for the group.

Edcon, which owns stores including Edgars, CNA and Boardmans, operates in an environment where there have been 10 interest rate increases since June last year, where household debt in relation to income is at 77,4%, and where credit has tightened and disposable income has slid.

Moody's did not lower Edcon's credit rating, but did raise questions about the risk it faces in relation to debt. However, Edcon says its transaction provided for permanent capital - it, in effect, never needs to pay back its debt, just the interest. And when the group relists, the debt will be covered.

“Our long-term business strategy remains on track and we are confident about the medium to long term prospects of the business,” its management says.

Source: Business Day

Published courtesy of