Fitch report warns of risks for Connells’ £253m Countrywide gamble

first_imgHome » News » Agencies & People » Fitch report warns of risks for Connells’ £253m Countrywide gamble previous nextAgencies & PeopleFitch report warns of risks for Connells’ £253m Countrywide gambleGlobal ratings firm says huge sums involved and risk that takeover could go wrong have persuaded it to maintain its A-minus rating for Skipton.Nigel Lewis2nd March 202101,307 Views Champagne corks may have been popping at Connells’ and Countrywide’s HQs recently but not so at credit rating Fitch, which has warned there are some risks involved.After the takeover was finalised last week, Fitch has now maintained the credit rating of Connells’ parent company Skipton Building Society to an A-minimum negative outlook.Fitch says the deal, although potentially lucrative if executed well, has risky downsides given Connells must reverse Countrywide’s three-year run of losses.The rating agency is also worried by the huge numbers involved; Skipton is lending Connells £253 million via an unsecured loan to both complete the deal, pay off Countrywide’s outstanding debt and provide some working capital. But overall it believes “that the intercompany loan being provided to Connells does not significantly impact our assessment of SBS’s asset quality although it brings some risk concentration”.“Fitch understands from management that Countrywide needs sustained and significant investments in technology, branches and staff,” says Fitch.Structural factors“The risks Connells and SBS face include the ability to integrate Countrywide and resolve some of the structural factors that are constraining its earnings, at a time of lingering challenges from the coronavirus crisis.“The business also remains highly sensitive to the outlook for the UK housing market, which remains uncertain.”Fitch has also said that, although the deal could make the joint Connells/Countrywide a titan of the UK housing market, it is likely to take several years to complete successfully during which the UK is likely to be enduring a post-Covid recession.“Skipton Building Society’s ratings could also be downgraded if the acquisition of CW leads to a significant erosion of profitability over the medium term,” it says.Read the report in full. Skipton Credit rating fitch ratings Skipton Building Society connells Countrywide March 2, 2021Nigel LewisWhat’s your opinion? Cancel replyYou must be logged in to post a comment.Please note: This is a site for professional discussion. Comments will carry your full name and company.This site uses Akismet to reduce spam. Learn how your comment data is processed.Related articles BREAKING: Evictions paperwork must now include ‘breathing space’ scheme details30th April 2021 City dwellers most satisfied with where they live30th April 2021 Hong Kong remains most expensive city to rent with London in 4th place30th April 2021last_img

Leave a Reply

Your email address will not be published. Required fields are marked *