Fitch affirms Cencosud at 'BBB'; outlook stable

Fitch Ratings has reaffirmed Cencosud’s long-term issuer default rating at ‘BBB’ with a stable outlook, citing the company’s strong market position. This rating, first assigned in 2022, reflects Cencosud’s diversified geographic footprint across Latin America and the United States, as well as its operations in stable sectors such as supermarkets and home improvement according to Fitch. The agency highlighted the company’s consistent margin expansion, robust cash flow generation, and disciplined cost management as key factors supporting the rating as noted in their analysis.

Recent strategic acquisitions, including GIGA Atacado in Brazil and The Fresh Market in the U.S., have further strengthened Cencosud’s competitive positioning in its core supermarket segment, according to Fitch. The stable outlook indicates that the rating is unlikely to change in the near term, provided the company maintains its financial discipline and operational performance.

Cencosud’s ‘BBB’ rating places it within the investment-grade category, signaling moderate credit risk. Fitch noted that the rating could be downgraded if the company’s leverage increases significantly or if its operating margins deteriorate due to external pressures such as inflation or regulatory changes as stated in their report. Conversely, an upgrade would depend on sustained improvements in profitability and further de-leveraging. Investors are advised to monitor the company’s progress in executing its strategic initiatives and managing macroeconomic risks in its operating regions.