Moody’s has cut Tesco’s rating, giving it only two grades above “junk status”.
The supermarket giant saw its ratings reduced to Baa2 from Baa1.
The news comes after Tesco revealed a third successive quarter of sales falls across the UK. Earlier this month, Tesco reported a 3.8% drop in like-for-like sales in the UK in the last quarter.
Moody’s also warned Tesco of tough conditions over the next 12 to 18 months.
Sven Reinke, senior analyst at Moody’s, said: “We have downgraded Tesco’s rating owing to the increasingly difficult conditions in the UK retail grocery market, which contributed to a 6 per cent drop in the group’s 2013-14 trading profit and weak first quarter of fiscal 2014-15 sales results.
“We expect these conditions to continue affecting the company’s credit profile negatively over the next 12-18 months.”
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