MARC has placed its ratings on Tesco Stores (Malaysia) Sdn Bhd’s (Tesco Malaysia) RM3.5 billion Conventional and Islamic Commercial Papers/Medium-Term Notes Programme on MARCWatch Negative. The rating action follows an announcement by Tesco Malaysia’s parent company UK-based Tesco PLC (Tesco) that it has identified an overstatement of its expected profit by about £250 million for the half-year ended August 23, 2014 (1HFY2015) which was earlier projected at £1.1 billion. As the ratings of the facilities reflect the credit strength of the corporate guarantee provided by Tesco, MARC is concerned that a continued weakening in Tesco’s operating performance could deteriorate its credit metrics to a level not commensurate with the current rating band.
MARC had lowered its ratings on Tesco Malaysia’s Conventional Commercial Papers/Medium-Term Notes Facility and Islamic Commercial Papers/Medium-Term Notes Facility to MARC-1(cg) /AA+(cg) and MARC-1ID(cg) /AA+ID(cg) respectively with a stable outlook in January 2014. Currently, there are no outstanding amounts under the rated programme.
MARC will resolve the MARCWatch Negative placement pending further clarity and upon full assessment of Tesco’s financial results which are expected to be announced on October 23, 2014.
Contacts:
Ngiam Tee Wei, +603-2082 2268/ teewei@marc.com.my;
Yap Lai Ken, +603-2083 2247/ laiken@marc.com.my.
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