Research Update: Shopping Center Owner Klepierre Outlook Revised To Negative; 'A-/A-2' Ratings Affirmed

In most countries where Klepierre S.A. operates, governments have adopted measures to limit social interactions to counter the spread of COVID-19. Therefore, all nonessential retail shops have closed over the past two weeks. As these measures will jeopardize retailers' ability to pay rents, we have revised our base-case scenarios for retail property owners, and now anticipate a significant decline in net rental income and valuation in 2020, with only a slow recovery in 2021. At this stage, we expect Klepierre to sustain its credit metrics within the threshold for our rating on it, but with reduced headroom. Consequently, we are revising our outlook to negative from stable, and affirming our 'A-/A-2' ratings. The negative outlook indicates that we could downgrade

...- In most countries where Klepierre S.A. operates, governments have adopted measures to limit social interactions to counter the spread of COVID-19. Therefore, all nonessential retail shops have closed over the past two weeks. - As these measures will jeopardize retailers' ability to pay rents, we have revised our base-case scenarios for retail property owners, and now anticipate a significant decline in net rental income and valuation in 2020, with only a slow recovery in 2021. - At this stage, we expect Klepierre to sustain its credit metrics within the threshold for our rating on it, but with reduced headroom. Consequently, we are revising our outlook to negative from stable, and affirming our 'A-/A-2' ratings. - The negative outlook indicates that we could downgrade Klepierre if its performance and credit ratios were to deteriorate further than we anticipate, because of the effect of the pandemic on retail conditions, such that the company cannot maintain its S&P Global Ratings-adjusted...

Research Update