This article is from the Australian Property Journal archive
CREDIT ratings agency Moody’s has downgraded its credit rating of struggling ASX-listed company Fletcher Building.
The firm has downgraded the rating from Baa2 on a stable outlook to Baa3 on a negative outlook, which also applies to the rating for the company’s medium-term note program.
Earlier in the year, the construction company put its plumbing and bathroom supplies business Tradelink up for sale – the deadline for non-indicative bids is the end of this week – as it swung to a first-half loss of $113 million. It is expected to report a hefty full-year loss, and CEO Ross Taylor and chairman Bruce Hassall will be leaving later this year.
Fletcher Building said the amended rating does not have a material impact on the company’s cost of funding in the near-term.
Fletcher Building acting CEO, Nick Traber, said, “The company remains committed to the credit metrics which underpin our original rating of Baa2 on a stable outlook. We will continue to work with Moody’s with an objective of returning our rating to this level over time.”
The downgrade comes a few days after Fletcher Building announced amendments to its banking agreements which will extend the tenor of its debt facilities, which it said would “enable it to rely on more favourable terms for covenant testing through to the end of calendar 2025 if required”.
“Given the current market environment and outlook, we have taken pre-emptive steps to reinforce the company’s resilience for the medium-term to position ourselves to navigate the tougher trading conditions,” Traber said on Monday.
The company has between $0.8 billion and $0.9 billion of liquidity expected as at the end of FY24.
An agreement on a $674.5m facility scheduled to expire in October 2025 extends the expiry date for the facility into two longer-dated maturities; $424.5 million will now expire in July 2027, and $250 million will expire in May 2029.
