Walmart Outlook to Negative by S&P on Flipkart;Shares Down 4.1%

(Bloomberg) -- Walmart’s outlook has been revised from stable by S&P after the retailer agreed to $16b deal to buy Flipkart, while Walmart’s ratings are affirmed.

  • S&P says it sees leverage increasing about a half turn more than previously projected for the coming fiscal year
  • Outlook revision is given these weaker credit metric projections and heightened execution risk as Walmart spends heavily to expand its online and global reach while continuing its share buyback program, S&P says
  • S&P says there is a one-in-three chance Walmart’s strategic repositioning to compete with encroaching retail players including Amazon.com through more aggressive global deal-making and a possible financial policy shift may result in a downgrade over the next two years
  • NOTE: Walmart’s S&P long-term foreign issuer credit rating has been AA since at least 1999, according to Bloomberg data; outlook had been stable since 2001
  • NOTE: Earlier, Walmart’s $16 Billion Flipkart Buy Gets Rude Welcome From Market

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