Fitch Downgrades CPALL’s NLT to “A-” as Leverage Rises Significantly after Tesco Deal

Fitch Downgrades CPALL’s NLT to “A-” as Consumer Sentiment Plunges amid Covid Resurgence.

Fitch Ratings (Thailand) has downgraded CP ALL Public Company Limited (CPALL)’s National Long-Term Rating to ‘A-(tha)’, from ‘A(tha)’. The Outlook is Stable.


The downgrade reflects Fitch’s expectation that the pace of reduction in CPALL’s fund flow from operation (FFO) adjusted net leverage will no longer be consistent with a higher rating over the next two years.

This is because consumer sentiment in Thailand has weakened significantly following the resurgence of Covid-19 cases in December 2020. Consequently, consumer spending was weak during the traditional year-end festive season and Fitch believes the trend will continue in 2021. Fitch Ratings now projected leverage to remain at 5.5x in 2022, compared with Fitch Ratings’ previous projection of 5.0x.

CP ALL’s leverage rose significantly following its December 2020 acquisition of a 40% stake in Tesco Stores (Thailand) Limited and Tesco Stores (Malaysia) Sdn. Bhd. (together, Tesco Asia). Fitch Ratings did not expect Tesco Asia to pay dividends to CPALL in 2021-2022 due to capex requirements and the interest burden from the acquisition loan at the immediate holding company level.