Fitch Solutions: Management Shakeups Drive Darden's CDS Out 47%

NEW YORK--()--Recent managerial changes at Darden Restaurants have sent the company's credit default swap (CDS) spreads to levels not seen in over a year, according to Fitch Solutions in its latest CDS case study snapshot.

Five-year CDS on Darden have widened 47% over the past month. After pricing historically at 'BB+' levels, credit protection on Darden's debt is now pricing a notch lower in 'BB' territory. Increased market scrutiny for Darden is likely attributed at least partly to senior management turnover, according to Director Diana Allmendinger. 'Darden's replacement of its CEO and entire Board of Directors, driven by the company's shareholders, seems to be the primary catalyst behind the recent CDS widening,' said Allmendinger.

In terms of credit quality, the verdict is still out given the tendency for activists to increase leverage and seek short-term gains over long-term value.

Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.

Additional information about Fitch Solutions' products is available at www.fitchsolutions.com

Fitch Solutions, a division of the Fitch Group, focuses on the development of fixed-income products and services, bringing to market a wide range of data, analytical tools and related services. The division is also the distribution channel for Fitch Ratings content.

Fitch Ratings and Fitch Solutions are part of the Fitch Group, a jointly-owned subsidiary of Fimalac, S.A. and Hearst Corporation. For additional information, please visit 'www.fitchsolutions.com'; 'www.fitchratings.com'; 'www.fimalac.com' and 'www.hearst.com'.

Contacts

Fitch Solutions
Diana Allmendinger
Director
+1-212-908-0848
Fitch Solutions, 33 Whitehall Street, New York, NY 10004
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

Contacts

Fitch Solutions
Diana Allmendinger
Director
+1-212-908-0848
Fitch Solutions, 33 Whitehall Street, New York, NY 10004
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com