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Moody's affirms Hammerson ratings following merger announcement

Moody's affirmed the Baa1 long-term issuer rating and senior unsecured debt ratings of Hammerson Plc following the announcement of its proposed merger with Intu Properties Plc, which would create an entity with a £21 billion pan-European retail and leisure portfolio.

The ratings outlook is stable.

"The rating affirmation reflects our view that, in the event of a successful merger, the transaction will be broadly neutral on Hammerson's credit profile especially in the short term," said Roberto Pozzi, Moody's vice president, senior credit officer and lead analyst on Hammerson.

Pozzi further remarked that Hammerson would benefit from superior scale, diversity and a more robust market position, as a result of the merger. However, this could be offset by the additional weakening of the company's fixed charge coverage ratio and an upsurge in leverage.

Moody's based the stable outlook on the expectation that Hammerson will maintain its conservative approach vis-à-vis its development pipeline and its anticipation that the company will operate within set financial rules.

The rating agency also said the merger would weaken Hammerson's debt metrics below the levels anticipated for the assigned rating, but that weakening would likely be temporary and partially counterbalanced by an enhanced business profile.