Bulletin: Canadian Tire Corp. Ltd.'s Retention Of Bank Will Slow Deleveraging But Maintain Headroom Under Downside Trigger

TORONTO (S&P Global Ratings) Dec. 9, 2024--S&P Global Ratings said today that Toronto-based retailer Canadian Tire Corp. Ltd.'s (CTC; BBB/Stable/A-2) announcement that it will retain 100% ownership of its Canadian Tire Financial Segment (CTFS) is, by itself, ratings neutral; however, without proceeds from any potential transaction, our expectations of debt reduction are now lower and hence deleveraging for CTC will be slower than expected. In our view, maintaining full ownership of the bank will keep CTC's leverage higher by 0.2x. We view the CTFS unit as not as important to the company but given Canadian Tire's successful Triangle Rewards loyalty program (11 million-plus active members and 2.3 million Triangle credit card holders), we believe that by owning and operating the

...TORONTO (S&P Global Ratings) Dec. 9, 2024--S&P Global Ratings said today that Toronto-based retailer Canadian Tire Corp. Ltd.'s (CTC; ###/Stable/A-2) announcement that it will retain 100% ownership of its Canadian Tire Financial Segment (CTFS) is, by itself, ratings neutral; however, without proceeds from any potential transaction, our expectations of debt reduction are now lower and hence deleveraging for CTC will be slower than expected. In our view, maintaining full ownership of the bank will keep CTC's leverage higher by 0.2x. We view the CTFS unit as not as important to the company but given Canadian Tire's successful Triangle Rewards loyalty program (11 million-plus active members and 2.3 million Triangle credit card holders), we believe that by owning and operating the bank CTC can maximize both CTFS' value and CTC's ability to pursue loyalty partnerships in the Canadian retail ecosystem (new consumer growth and financing). We expect Canadian Tire's core retail business will likely...

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