What The Reopening Means for Canadian Food Retailers

Given the evolution of the coronavirus pandemic, credit metrics and the overall credit risk profiles of the food retailers in our portfolio have generally strengthened as a result of the two-year aggregate effects of the pandemic. That said, we continued to interpret this strengthening as largely temporary and within the context of the respective rating categories as we expect that many of the positive pandemic-related effects on operating results will moderate or unwind and that any structural post-pandemic effects (e.g., the increased prevalence of working from home) will not be material enough to solely drive any positive rating actions. Looking ahead over the next 12 months, DBRS Morningstar does also not expect to take any rating actions solely as a result of the pandemic and, more importantly, of its after effects as we believe that Canadian food retailers have generally built up ample cushion and will exercise capital management in a balanced manner, such that they should be able to absorb any further moderation of volumes as well as inflationary pressures because of input cost and wage increases within the context of their current rating categories.