Morrisons braces for £95m hit in borrowing costs as debt pile soars
Morrisons is set to be hit by £95 million in borrowing costs as its debt pile soars.
Credit rating agency Moody’s has estimated that Morrisons could see its annual interest payments rise from £35 million to £335 million, on top of its current £6.6 billion debt pile.
This comes following private equity firm, Clayton, Dubilier & Rice (CD&R)’s £7 billion acquisition of the grocery retailer last October, which has since seen over half of its long-term debts left floating and its interest unhedged, according to reporting by The Sunday Times.
If the Bank of England increases interest rates to 4.25%, this could see the supermarket chain faced with a further £60 million.
Hikes in lending rates could also cost Morrisons an additional £7 million to £8 million for every 25 basis points increase, Moody’s forecasts
This news comes following discounter Aldi’s takeover as the fourth biggest grocer in the UK as its market share rose to 9.2% in the four weeks to 7 August, whereas Morrisons sat at 9%.
Last week, Morrisons chief operating officer Trevor Strain stepped down after 10 years at the retailer.
