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Investing.com -- Moody’s Ratings has put the A2 issuer and senior unsecured ratings of Seven & i Holdings under review, indicating a potential downgrade.
This decision is driven by the company’s recently announced plan to buy back 2 trillion yen of its own shares, a move that Moody’s believes could limit Seven’s ability to improve its leverage in the next 12-18 months.
The agency has stated that this buyback scheme is unfavorable to the company’s creditors. In addition to this, the potential initial public offering (IPO) of 7-Eleven Inc., a subsidiary of Seven & i Holdings, could significantly increase the risk of structural subordination.
The review for a downgrade will include a detailed examination of the company’s management plan to address its weakening credit profile. This includes a focus on the elevated debt-to-Ebitda ratio, a key financial metric used to measure a company’s financial health.
Moody’s will also look into the company’s strategy to maintain liquidity and manage its leverage during the share buyback process.
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