Fitch downgrades Canary Wharf Group

Fitch Ratings has downgraded Canary Wharf Group Investment Holdings further into junk status. The agency has lowered the issuer’s long-term issuer default rating from BB to B and its senior secured rating from BB+ to BB-. Both remain on rating watch negative given what Fitch calls the “continuing short-term refinance risk” of £350m in bonds due in April 2025. The bonds are secured against the Canary Wharf estate’s retail and car park assets as well as some offices, totalling some £1.15bn. “While the group has successfully refinanced its 2024 property-specific secured bank financings, CWGIH still faces significant maturities of £350m for its secured bond in April 2025 and £250m equivalent secured bond in April 2026,” Fitch said. “Fitch expects to resolve the [rating watch negative] by end-2024 when CWGIH concludes tangible actions to repay its April 2025 bond, while providing visibility on cash flows to meet the April 2026 maturity.” Canary Wharf Group has refinanced £1.5bn of funding for 1 Churchill Place, 25 Churchill Place and 1/5 Bank Street with bank debt so far this year, and has no property-specific refinancing now due until 2029. Fitch noted the estate’s “evolution… from pure offices to mixed-use”, with more than 3,500 residents and a growing occupier base from the life sciences sector. “Some existing space and towers require capex to accommodate hybrid working, enhance green credentials and to meet evolving tenant expectations for modern offices,” the agency said. “While this capex requirement burdens the group’s leverage, it helps support the transition of these buildings to mixed-use.” View market analytics for Canary Wharf >> Photo © Evgeny Klimenchenko/Unsplash