BREWING group Guinness plc, grappling with the effect of declining drinks markets had its debt downgraded yesterday by international rating agency Moody's Investors Service.
"The downgrades reflect the combination of the difficult trading outlook for the global spirits industry and the increasing pressure on Guinness to reinvigorate its stock performance, which may be detrimental to the interests of bondholders," Moody's said in a statement.
Moody's cut the ratings on the senior unsecured debt of Guinness plc and its subsidiaries to Aa3 from Aa2, and the rating on its subordinated debt to Al from Aa3. Moody's said about $1.65 billion (£1 billion) of debt was affected.
Guinness has a robustly structured balance sheet, and is achieving solid interest coverage measurements superior to its industry peers," Moody's said.
But European, American and Japanese drinks markets, which together represent the overwhelming majority of its sales and most of its trading profit, were mature, characterised by fierce competition, declining alcohol consumption and minimal pricing flexibility.
"These conditions particularly affect Guinness's Scotch dominated spirits business." Moody's said the company will likely have to review its growth options in view of sluggish market development.
