Casino Guichard-Perrachon shares and bonds slump to an all time low after Standard and Poor’s stated that it has been considering cutting the French grocer’s debt rating to junk, stating their concerns about the leverage as well as the poor environment in Brazil as well as Asia.
Standard and Poor stated Saturday Casino’s BBB- long term rating is now in the negative watch as well as its profitability margin will continue to be fairly weak for an extended period of time. Not to mention that its debt levels that have primarily located at the French operations are just too high. Standard and Poor stated that it may cut the rating as much as two levels. This agency confirmed the Casino’s rating in December but the company lowered its expectations on Thursday for underlying earnings before interest and taxes in 2015.
The retailer is now under attack by the short-seller Carson Block’s Muddy Waters LLC, who contends that the Casino is using its financial engineering in order to mask a sharply deteriorating core business. It has also stated that Standard and Poor has ultimately understated the retailer’s high debt burden. Casino has rejected these claims, stating that it has a financial structure that is sound and that it is thinking about taking legal action.
Casino shares have fallen as much as 5.6 percent to 37.81 euros in Paris. Casino’s 900 million euros which translates to $980 million dollars of bonds maturing in August of 2026 slumped to nine cents on the euro, this is a record low of 77 cents, according to the Bloomberg data.
Casino also stated that its plans to raise 4 billion euro by selling assets during this year, which includes its Big C subsidiary in Thailand.