S&P downgrades Enterprise Inns rate notes

Standard & Poor's (S&P), the global ratings agency, has downgraded a number of Enterprise Inns' securitisation vehicles.

S&P said it was lowering its credit ratings on all classes of rate note in the Unique Pub Finance Co. plc (Unique) corporate securitisation, which is effectively a series of debt vehicles backed by cash-flow from around 3,300 Enterprise pubs.

The rating agency said it was also applying what it called a "negative outlook" to the rate notes, reflecting its view "on the possibility that the transaction's business risk could increase if the underlying performance does not start to show significant improvement over the next 12 months".

"We believe that continued difficult trading conditions in the UK's tenanted pub sector have led the transaction to perform at levels below our previous expectations."

S&P went on to say that factors likely to impact the pub trade, "such as decreasing on-trade beer volumes, tough off-trade competition, susceptibility to minimum wage pressures, and sensitivity to cyclical consumer spending" would continue to affect all the pub securitisations it rated.

"Unique has performed below our expectations over the past 12 months, with available cash flow declining faster than expected," it said.

As well as Enterprise, S&P has in recent months downgraded a number of Punch Taverns' securitisations as concerns grow over the impact of a downturn in trading and a reduced pub estate on certain companies' ability to meet loan repayments.

Enterprise Inns' shares finished yesterday's trading session down two pence at 108.7p.