DBRS Downgrades Weston to Pfd-3(high)

Following the S&P downgrade, the DBRS downgrade of Loblaw and the Weston Credit Watch Negative by DBRS, DBRS has announced that it:

today downgraded the long-term ratings of George Weston Limited (Weston or the Company). The Notes and Debentures have been downgraded to BBB (high), the Exchangeable Debentures to BBB and the Preferred Shares to Pfd-3 (high), all with a Stable trend. At the same time, DBRS has confirmed the short-term rating of Weston at R-1 (low), but revised the trend to Negative.

Although management of Loblaw and Weston are separate, and there is no cross-default or cross collateralization covenants on the respective debt, Weston’s ratings reflect the investment in Loblaw, as it is a significant portion of the group’s consolidated operations. Weston’s long-term rating has historically been notched lower to reflect Weston’s own financial profile and the implicit structural subordination, given Loblaw’s minority public float.

Weston’s rating also reflects the underlying, albeit lower, credit rating of the bakery business. For the past few years, the bakery operations have stabilized/improved enough to limit further declines in the long-term rating, leading to the Stable trend. As such, any further deterioration in Loblaw’s long-term rating would not necessarily affect the long-term rating of Weston – i.e., ratings could potentially be the same.

Weston has the following preferred issues trading on the TSX: WN.PR.A WN.PR.B WN.PR.C WN.PR.D & WN.PR.E. All except WN.PR.B are fixed-rate perpetual; WN.PR.B is retractible.

5 Responses to “DBRS Downgrades Weston to Pfd-3(high)”

  1. […] PerpetualPremium (for now! Will be “scraps” after month-end, due to the downgrade.) […]

  2. […] New low of 24.64 today. Now with a pre-tax bid-YTW of 5.89% based on a bid of 24.64 and a limitMaturity. A recent downgrade. […]

  3. […] New low of 24.64 today. Now with a pre-tax bid-YTW of 5.89% based on a bid of 24.64 and a limitMaturity. A http://www.prefblog.com/?p=863″>recent downgrade. […]

  4. […] There was a lot of activity this month: a huge migration from PerpetualPremium to PerpetualDiscount; a transfer of all the Weston issues to Scraps due to credit concerns; and a transfer of several issues from Scraps due to increased volume. […]

  5. […] More mundanely, the quarterly results from Loblaws seem to argue against any imminent reversal of the Weston downgrade. And I couldn’t resist checking the definitive BCE / Teachers’ Agreement: 6.4(9): The Purchaser acknowledges and agrees that its obtaining financing is not a condition to any of its obligations hereunder, regardless of the reasons why financing is not obtained or whether such reasons are within or beyond the control of the Purchaser. For the avoidance of doubt, if any financing referred to in this Section 6.4 is not obtained, the Purchaser will continue to be obligated to consummate the Arrangement, subject to and on the terms contemplated by this Agreement. […]

Leave a Reply

You must be logged in to post a comment.