Canary Wharf credit rating cut deeper into junk by Fitch

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Canary Wharf Group’s credit has been cut further into junk territory by Fitch, with the rating agency warning over the risks the dockland landlord faces in refinancing debts next year. 

The rating agency on Wednesday cut CWG’s credit rating three notches from BB to B or “highly speculative”, while the group’s senior secured debt was lowered from BB+ to BB-. 

The downgrades reflected “continuing short-term refinance risk” to CWG’s £350mn bond that matures in April — and “prospective cash flow constraints”, Fitch said.

The east London financial district, which is owned by Brookfield and the Qatar Investment Authority, had gross debt of £4.2bn as of June through a complex set of structures, including two other bonds due in 2026 and 2028.

The company is battling a London office market that was disrupted by the adoption of hybrid working following the pandemic and higher interest rates.

HSBC and Moody’s have decided to move their offices from the docklands site but Barclays and Morgan Stanley have recently made deals to extend their stay.

Brookfield and the QIA have told CWG’s auditors they would provide financial support if needed, and have already injected £300mn of new equity. Fitch and Moody’s both cut CWG ratings last year. 

The landlord is already in talks to address the bond maturing in April by raising debt against its £888mn underground shopping centres. It could also consider bringing in new investors to take an equity stake in a new joint venture tied to its retail portfolio. 

CWG has completed several major refinancings this year, clearing all the immediate debt deadlines for loans tied to particular buildings. Executives have said these agreements show lenders’ confidence in CWG’s plans to transform and diversify the estate, including adding more residential properties.

It recently paid down a £564mn loan tied to Société Générale by around £100mn and extended the debt to 2029. It had already struck similar deals with lenders against the Barclays and EY towers. 

Fitch warned that higher debt costs on new loans would worsen CWG’s interest cover, a measure of how comfortably a company can pay the interest on its debts. 

The rating agency said that following the refinancing this year the company’s income after paying its debt costs had already “reduced considerably” — and noted some office leases to Citibank will expire in 2026 when the bank moves back into the tower that it owns, which is currently being refurbished.

The bonds due in 2025 were trading at around 97 pence on the pound on Wednesday. CWG declined to comment.