Steinhoff downgraded deeper into junk status

Moody's Investor Services has downgraded Steinhoff's credit rating deeper into junk

Moody’s Investor Services has downgraded furniture and clothing retailer Steinhoff’s corporate family ratings by three notches, taking it from B1 to Caa1 – seven levels below investment grade. This is the second multilevel downgrade the company has faced since the discovery late last year of accounting irregularities.

Moody’s said in a statement:

“Steinhoff’s liquidity levels could prove insufficient to sustain its European operations in the near term if it is unable to shore up its cash balances or other sources of liquidity. The situation has been compounded by its operating companies placing an additional liquidity burden on Steinhoff’s centralised treasury function to fund their working capital needs.”

Moreover, Moody’s has kept Steinhoff on review for further downgrades, saying the company may face challenges repaying or refinancing its $1.75 billion of debt maturing this year.

Pictured: Steinhoff’s ousted CEO, Markus Jooste