Tesco share price falls as Fitch downgrades its long-term rating
Credit ratings agency Fitch has downgraded Tesco's long-term rating to BB+, from BBB-.
Shares in the supermarket were down 1.1 per cent to 222.6p in mid-afternoon traading after the ratings giant said its decision reflected a "weakening outlook for the group's near term profitability in its core UK operations".
The news comes days after Tesco unveiled full-year losses of almost £6.4bn, almost the biggest loss in UK corporate history, and considerably higher than the £5bn analysts had expected. The news sent Tesco's share price down five per cent on Wednesday.
Today Fitch said it expected the supermarket's free cash flow generation to be "impacted by the timing of restructuring charges and working capital effects associated with changes to supplier relationships.
"These, despite discipline on shareholder returns and investments, have led to a spike in leverage and a financial risk profile, including asset disposals, that is more aligned with a 'BB+' rating."