Publication Date: January 18, 2016

Press Release

Rating ‘brAA+’ assigned to Companhia Brasileira de Distribuição (CBD) placed on negative CreditWatch to reflect the same rating action taken for Casino

Primary analyst: Wendell Sacramoni, CFA, São Paulo, 55 (11) 3039-9741, wendell.sacramoni@standardandpoors.com

Additional analyst contact: Luísa Vilhena, São Paulo 55-11-3039-9727, luisa.vilhena@standardandpoors.com

Ratings committee leader: Luísa Vilhena, São Paulo 55-11-3039-9727, luisa.vilhena@standardandpoors.com

Summary

·         On January 15, 2016, Standard & Poor’s Ratings Services placed the ‘BBB-’ ratings of Casino on CreditWatch negative.

·         We placed CBD’s rating on CreditWatch negative because, in accordance with the methodology adopted by the group, a company’s rating may not be higher than that attributed to its parent company.

·         The CreditWatch negative listing means that we could affirm or downgrade by one notch CBD's rating if Casino's ratings are affirmed or downgraded by one notch; or that we could downgrade the company’s ratings by one or more notches if Casino’s rating is downgraded by two notches.

Rating Action

São Paulo (Standard & Poor’s), January 18, 2016 – Standard & Poor’s Ratings Services placed today the rating of ‘brAA+’ on the Brazilian National Scale assigned to Companhia Brasileira de Distribuição (“CBD”) on the CreditWatch negative list, reflecting the same action taken for the ‘BBB-’ ratings of its controlling group Casino Guichard-Perrachon & Cie S.A. (Casino: BBB-/CW Neg./A-3).

Fundamentals

The action reflects our belief that the rating of a subsidiary (e.g., CBD) may not be higher than the rating of its parent company, reflecting the risk of the latter interfering negatively in the subsidiary in a stress scenario. Accordingly, a downgrading of Casino’s ratings could lead to a similar move in CBD’s rating.

Based on our group's rating methodology, we consider CBD to be a subsidiary of “strategic importance” to Casino, given our belief that the company is important to the group’s long-term strategy and accounts for a significant portion of its revenue and EBITDA generation, and as such is unlikely to be sold.

CreditWatch

CreditWatch negative means that in the next 90 days we may affirm or downgrade by one notch CBD's rating if Casino's ratings are affirmed or downgraded by one notch, or that we could downgrade CBD’s rating by one or more notches if Casino’s ratings are downgraded by two notches, which is in line with our mapping table on the Brazil National Scale.

Criteria and Related Articles

Criteria

·         Standard & Poor's National and Regional Scales Mapping Tables, September 30, 2014.

·         National and Regional Scale Credit Ratings, September 22, 2014.

·         General Criteria: Group Ratings Methodology, November 19, 2013.

·         Corporate Ratings Methodology, November 19, 2013.

·         General Criteria: Use of CreditWatch and Outlook, September 14, 2009.

Articles

·         Retailer Casino 'BBB-/A-3' Ratings On CreditWatch Negative On Weak Trading In Brazil, In The Context Of High Debt Level, January 15, 2016.

·         Companhia Brasileira de Distribuição (CBD) ratings reaffirmed at 'brAA+'; outlook remains positive, September 18, 2015.

Additional regulatory information

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