Moody's Investors Service on Dec. 3 placed the Ba3 long-term corporate family and Ba3-PD probability of default ratings of British online grocer Ocado Group PLC under review for possible downgrade, citing the company's proposal to issue about £600 million of senior unsecured convertible bonds due 2025.
Concurrently, the agency placed under review for possible upgrade the Ba3 rating of Ocado's £250 million backed senior secured notes due 2024. The outlook has been revised to rating under review from stable.
Moody's said the proposed issuance will more than double Ocado's gross Moody's adjusted debt to approximately £1.1 billion. While the agency acknowledges that the issuance will boost the company's already healthy liquidity, it also said the increased funding commitments will further deteriorate Ocado's credit metrics during 2020.
The agency said it will review the scale and timing of Ocado's numerous expansionary projects and their effect on the company's financial and credit profile. It also said that it is taking into consideration the company's governance practices, including financial policies.