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Moody's gives Unibail A2 first-time rating, places Westfield ratings on review

Moody's assigned an A2 first time long-term issuer rating to Unibail-Rodamco SE with a stable outlook, on the back of the company's US$15.68 billion deal to acquire Westfield Corp.

The rating agency said the A2 rating reflects Unibail's "exceptionally strong" business profile when it acquires Westfield, as it will be the new owner of shopping centers in Europe and the U.S. Moody's believes the combined entity will maintain a rating within the A2 level, with Europe's biggest commercial landlord continuing to attract demand from retailers and support property values over time.

Moody's also attributed the rating to the conservative funding Unibail will use for the Westfield purchase, comprising 65% shares and 35% cash, as well as the expectation that Unibail's leverage will remain moderate at roughly 43% by 2018-end and will decrease gradually to 40% by 2019/2020 primarily because of property disposals.

Meanwhile, the A3 issuer and P-2 short-term issuer ratings of Unibail's takeover target, Westfield, were placed on review for upgrade.

The potential upgrade reflects the strength of the combined portfolio of the Unibail-Westfield merged company, as well as the geographical diversity of the properties worth nearly US$70 billion, and include 56 flagship shopping centers and malls in prime locations in the U.S. and Europe.

Upon the close of the transaction, which is expected in the first half of 2018, Westfield's issuer and senior unsecured ratings will be raised to A2, while the short-term issuer rating will be upgraded to P-1.