International Retailer Tesco Downgraded To 'BBB-/A-3' On Lower Profitability; Off Watch; Outlook Negative

The results of an independent investigation have confirmed that Tesco PLC overstated its profit expectations by £263 million, affecting the group's trading profit by £118 million in the first half of this financial year. Our updated forecasts indicate weaker credit metrics and we have therefore lowered our assessment of Tesco's financial risk profile to "aggressive." Accordingly, we are lowering our long-term corporate credit rating on Tesco to 'BBB-' from 'BBB', and the short-term rating to 'A-3' from 'A-2'. The negative outlook reflects our assessment of Tesco's significant management and governance deficiencies, our view that Tesco will continue to experience difficult trading conditions, and that its credit metrics are unlikely to improve unless new management executes targeted financial policies that reduce

...+ The results of an independent investigation have confirmed that Tesco PLC overstated its profit expectations by ú263 million, affecting the group's trading profit by ú118 million in the first half of this financial year. + Our updated forecasts indicate weaker credit metrics and we have therefore lowered our assessment of Tesco's financial risk profile to "aggressive." + Accordingly, we are lowering our long-term corporate credit rating on Tesco to '###-' from '###', and the short-term rating to 'A-3' from 'A-2'. + The negative outlook reflects our assessment of Tesco's significant management and governance deficiencies, our view that Tesco will continue to experience difficult trading conditions, and that its credit metrics are unlikely to improve unless new management executes targeted financial policies that reduce debt. LONDON (Standard & Poor's) Oct. 24, 2014--Standard & Poor's Ratings Services today lowered its long-term corporate credit rating on U.K.-based international retailer...

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