Moody's 'likely' to downgrade merged Westfield

Ratings agency continues review for downgrade of retail group, pending merger.

Ratings agency Moody's is continuing its review for a downgrade of Westfield Group's A2 issuer rating, saying a cut to A3 is likely if a planned merger goes ahead.

The agency placed the rating on review in December after Westfield announced plans to merge its Australian and New Zealand assets with those of Westfield Retail Trust.

The group would then have a weaker credit profile as a result of the lower asset quality and narrower asset base, Moody's senior analyst Maurice O'Connell said.

"The resulting asset base will be around half of the existing book value, and Westfield Group -- to be renamed Westfield Corporation under the proposed restructure -- will lose high quality Australian assets that have maintained an occupancy rate of 99 per cent over the past decade," Mr O'Connell said.

"Furthermore, the new Westfield Corporation has a significant pipeline of large development projects which has the potential to increase financial leverage."

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