The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action 

Scope Ratings GmbH (Scope) has downgraded its issuer rating on Casino, Guichard-Perrachon S.A. (Casino) and its guaranteed subsidiary Quatrim S.A.S. to B from B+ and placed them under review for a possible downgrade. Scope has also downgraded the senior unsecured debt rating to B- from B, the senior secured debt rating to B+ from BB- and the subordinated (hybrid) debt rating to CC from CCC and placed all these long-term debt ratings under review for a possible downgrade. 

Rating rationale 

The downgrade is driven by the deterioration of the credit metrics following the 2022 results and higher uncertainties regarding the future developments of the company. On a consolidated basis, Casino’s leverage has significantly increased in 2022, above 5.5x, deviating from Scope’s rating case. The downgrade is also driven by the partial disposal of Casino’s Brazilian subsidiary Assaí for EUR 723m, impacting both the business risk and financial risk profiles. Following the completion of the transaction on March 17th, 2023, Casino’s stake in Assaí dropped to 11.7%, which would lead to the deconsolidation of the subsidiary. Scope assesses Casino’s credit risk on a consolidated basis and Casino’s business risk profile will deteriorate from reduced size and lower diversification as per Scope methodology although benefiting from accretive effect on profitability. Casino’s financial risk profile will also deteriorate because of higher leverage, despite the EUR 723m proceeds from the sale of Assaí, deviating from Scope’s previous rating case.  

The placement of the ratings under review for possible downgrade is driven by the reduced visibility regarding the difficult business environment in France as well as the impact and timing of additional disposals in Latam. On the contrary, Scope believes that the merger with Teract could benefit Casino’s business risk profile, if the merger is finalised in line with the disclosed preliminary discussions. 

On March 22nd, 2023, Rallye, Casino’s main shareholder, announced its capacity to repay its creditors according to the safeguard plan being at risk and its intention to initiate discussions with them to potentially adjust the plan. Although the consequences upon these negotiations are unclear, in Scope’s opinion, the constraint represented by the necessity for Casino to pay future dividends to serve Rallye’s debt could be further deferred, similarly to the two years extension implemented in 2021. A successful negotiation between Rallye and its creditors allowing payments’ deferral is viewed as credit positive for Casino. Nevertheless, Scope assesses the increasing credit risks at Rallye’s level as credit negative as it carries uncertainties regarding the future shareholding of Casino. 

Under Review 

The rating agency expects to resolve the under-review status as soon as possible. Scope will closely follow developments related to the Teract merger, the evolution of the safeguard procedure at Rallye’s level and potential additional divestment, particularly in Latam. 

A positive rating action is deemed as remote given the limited likelihood that Casino’s indebtedness and the resulting leverage could recover in the short-term. 

A rating confirmation could be considered if Scope received sufficient visibility and comfort that Casino’s financial strength would not deteriorate any further. 

A rating downgrade could be triggered by increased transparency that Casino’s financial risk profile could deteriorate further. 

Long-term and short-term debt ratings 

Following the downgrade and under review placement of Casino, Guichard-Perrachon S.A.’s and Quatrim S.A.S.’s issuer ratings, all long-term debt ratings have been downgraded and placed under review for a possible downgrade. 

Scope has downgraded the rating on senior unsecured debt issued by Casino, Guichard-Perrachon S.A. to B- from B and placed it under review for a possible downgrade. 

The rating on senior secured debt issued by either Casino, Guichard-Perrachon S.A. or Quatrim S.A.S. has been downgraded to B+ from BB- and placed under review. 

Lastly, the rating on subordinated (hybrid) debt issued by Casino, Guichard-Perrachon S.A. has been downgraded to CC from CCC and placed under review for a possible downgrade. 

The S-4 short-term debt rating is not affected by the rating action on the issuer rating. 

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlooks, (General Corporate Rating Methodology, 15 July 2022; Retail and Wholesale Rating Methodology, 27 April 2022), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlooks and the principal grounds on which the Credit Ratings and/or Outlooks are based. Following that review, the Credit Ratings were amended before being issued. 

Regulatory disclosures
These Credit Ratings and/or Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlooks are UK-endorsed.
Lead analyst: Thomas Langlet, Associate Director
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings on 11 January 2022. The Credit Ratings/Outlooks were last updated on 27 January 2023.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings.

Conditions of use/exclusion of liability
© 2023 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Investor Services GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.