Woolworths’ credit rating cut

Standard & Poor’s slapped Woolworths with a rating downgrade today. It’s less worrying than the share price reaction suggests.

Yesterday, Woolworths’ share price was saved by the Reserve Bank’s interest rate cut. By contrast, today’s decision by Standard & Poor’s to downgrade Woolworths credit rating has caused it to fall 7%. Some of this decline is probably a delayed reaction to yesterday’s sales announcement.

Credit rating downgrades do have a real impact because they generally mean a company will pay a higher interest rate on its debt. But they’re rarely worth worrying about unduly.

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