Moody’s downgrades Croatian Agrokor’s rating outlook to negative

Moody’s downgrades Croatian Agrokor’s rating outlook to negative
By bne IntelliNews February 26, 2017

Moody's Investors Service has downgraded the rating outlook of Croatia-based food retailer and manufacturer Agrokor from stable to negative and affirmed the company at B3, the rating agency announced on February 24.

Given the size of its operations and the number of people it employs, Agrokor is of strategic importance to the Croatian economy. Moody’s latest action follows concerns about the company’s ability to repay its debts, which Croatian Finance Minister Zdravko Maric sought to dispel on February 15. 

The outlook downgrade reflects Moody's current view that there are an increasing number of risks and uncertainties weighing on Agrokor's credit quality as evidenced by a deterioration in its access to credit markets as well as high exposure to a small number of banks, with Russian financial institutions Sberbank and VTB Bank providing 52% of the restricted group debt and 87% of its bank debt as of September 2016, according to the statement from the rating agency.

"Our decision to change Agrokor's outlook to negative reflects the uncertainties weighing on its credit profile, which is constrained by a more limited access to credit markets and a need to stabilise operating performance and leverage at a time when the company's shareholder Adria is due to address the repayment of its PIK toggle loans,” said Moody’s analyst Vincent Gusdorf.

An earlier report by Moody’s raised questions about the company’s ability to pay its maturing loans. Moody’s wrote that while it thought Agrokor’s liquidity was sufficient to address 2017 maturities, debt remains high. 

However, Maric responded by telling local media that Agrokor was still a good company and he did not expect its situation to deteriorate. 

Agrokor has total loan liabilities of €3.4bn, including €1.3bn to Sberbank and VTB Bank, according to media reports.

The company employs about 60,000 people across the region and is the largest private company in Croatia with 40,000 employees. Its core business includes production and distribution of food and drinks, as well as retail.

Agrokor has subsidiaries in Bosnia & Herzegovina, Slovenia, Serbia and Hungary. In September 2015, Agrokor increased its stake in Slovenian retailer Merkator, which is also present in Croatia, Serbia, Montenegro and Bosnia, to 80.75%.

Related Articles

Croatia raises €1.25bn via 10-year Eurobonds as yields fall to historic lows

The Croatian finance ministry sold €1.25bn worth of 10-year Eurobonds with an actual yield of 3.20% and a coupon rate of 3%, the ministry said in a March ... more

EBRD says 2016 net profit was around €1bn

The European Bank for Reconstruction and Development (EBRD) said it made a net profit of around €1bn in 2016, up by a quarter from the €802mn it made in ... more

CEE lender Erste lifts profit by a third to €1.265bn in 2016

Erste Group reported on February 28 record net profit of €1.265bn in 2016, a rise of 31% on the previous year. The Austrian banking group proposed doubling its dividend to €1 a share for the ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss