PARIS/LONDON (Reuters) - Accor (PA:ACCP) was downgraded to junk status by credit ratings agency Standard & Poor's as travel restrictions dim the outlook for the operator of Ibis and Sofitel hotels.
S&P cut Accor's credit rating to 'BB+' from 'BBB-' with a negative outlook.
"We now anticipate weaker earnings and debt metrics in 2020 and 2021," S&P wrote, citing "the effects of the COVID-19 pandemic on travel volumes and on the economy in general".
"The negative outlook reflects the risk that an inadequate trading recovery in the hotel and lodging sector, slow or insufficient mitigating measures by Accor, or execution risk around asset disposals could result in Accor being unable to show clear operating and financial progress in the second half of 2020 and in 2021," S&P said.
The number of companies or countries at risk of having their credit ratings cut has been pushed to an all-time high by the pandemic, an S&P Global analysis showed in May.
Accor posted a first-half loss of 227 million euros ($270 million) and said it planned to cut 1,000 jobs as it seeks 200 million euros in annual cost savings.
Accor shares initially fell around 2% at the start of trading but had recovered to trade broadly flat by 1023 GMT.
The prices of its bonds edged up as the downgrade had been anticipated by some credit analysts.
($1 = 0.8399 euros)