Research Update: Canadian Tire Corp. Ltd. And CT REIT Downgraded To 'BBB' From 'BBB+' On Pressured Leverage From COVID-19 Concerns

S&P Global Ratings' economists believe that due to the COVID-19 pandemic, a global and Canadian recession in 2020 is likely and, therefore, we expect consumer discretionary spending to slow. As a result, at Toronto-based general merchandiser Canadian Tire Corp Ltd. (CTC), the COVID-19 pandemic is directly responsible for current store closures (except Canadian Tire Retail where store hours are curtailed) and government-mandated social distancing, which we believe will negatively affect revenue and EBITDA. Therefore, on March 31, 2020, S&P Global Ratings lowered its long-term issuer and issue-level ratings on CTC to 'BBB' from 'BBB+'. At the same time, it affirmed the 'A-2' commercial paper rating on the company. We also lowered our issuer credit rating on CT Real Estate Investment

...- S&P Global Ratings' economists believe that due to the COVID-19 pandemic, a global and Canadian recession in 2020 is likely and, therefore, we expect consumer discretionary spending to slow. - As a result, at Toronto-based general merchandiser Canadian Tire Corp Ltd. (CTC), the COVID-19 pandemic is directly responsible for current store closures (except Canadian Tire Retail where store hours are curtailed) and government-mandated social distancing, which we believe will negatively affect revenue and EBITDA. - Therefore, on March 31, 2020, S&P Global Ratings lowered its long-term issuer and issue-level ratings on CTC to '###' from '###+'. At the same time, it affirmed the 'A-2' commercial paper rating on the company. - We also lowered our issuer credit rating on CT Real Estate Investment Trust (REIT) to '###' from '###+'. - Finally, we forecast the company's leverage to deteriorate close to 3.5x for the next 18-24 months, and have revised our financial risk profile on CTC to significant...

Research Update