Moody's to consider downgrading Tesco's A3 credit rating as Tesco sells £450.5M of bonds secured on store rents, due in 2041

Cindy Allen

LOS ANGELES , January 26, 2012 (Industry Intelligence) – Moody’s Investor Service has announced that it is considering downgrading Tesco Plc’s A3 credit rating as Tesco’s sells £450.5 million of bonds priced to yield 275 basis points, Bloomberg reported Jan. 26.

The bonds are secured on store rents and will be due in 2041.

An anonymous banker reported that Tesco Property Finance 5 Plc had issued the bonds, and that Lloyds Banking Group Plc, HSBC Holdings Plc and the Royal Bank of Scotland Group Plc had administered the sale.

In February 2011, Tesco sold similar securities that were due in 2040 and priced to yield 140 basis points, said Bloomberg.

Moody’s reported that it is also considering downgrading approximately £4 billion of commercial mortgage-backed securities that are linked to Tesco.

The primary source of this article is Bloomberg, New York, New York, on Jan. 26, 2012.

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