Moody’s Ratings upgrades Asda to B1

Asda today welcomed Moody’s upgrade of the company’s corporate rating to B1 from B2, following a strong financial performance in FY23, during which the business delivered a 24% increase in Adjusted EBITDA after rent to £1.1bn and a 5.4% rise in like-for-like sales.

Moody’s attributed the upgrade to the ‘solid’ financial performance of the business in FY23, particularly the reduction in leverage and growth in underlying free cashflow.

Earlier this week, Asda updated on FY23 trading performance and confirmed that underlying free cashflow increased by 31% year-on-year to £776m. This improved cashflow generation contributed to Asda reducing its total leverage to a multiple of adjusted EBITDA after rent to 3.0x from 3.9x

Moody’s also said the upgrade took into account the positive impact refinancing would have on Asda’s future leverage.

Michael Gleeson, Asda’s Chief Financial Officer, said: “We welcome Moody’s upgrade which acknowledges the strong performance of the business in FY23. This was underpinned by a solid capital structure that enabled us to deliver value for customers throughout the year and provided us with the confidence to boost growth through strategic acquisitions. We remain focused on doing the right thing for customers, colleagues and local communities – and are putting in place the strategic building blocks to set up Asda for long-term success.”