Today’s game-changer: Moody’s just downgraded Tesco to ‘junk’
There was more bad news for embattled Tesco today, after it emerged that credit rating agency Moody’s had downgraded the supermarket to ‘junk’ status.
What happened?
Tesco
(LSE:TSCO)
Following the announcement of brutal cuts, shares closed at 209.25 yesterday, up 15%, the largest single-day rise in 27 years. Tesco's surge dragged the FTSE 100 up 2.34%, adding £3bn of value to the index by the day's close.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
So what's the problem?
"We have downgraded Tesco's ratings because structural changes in the UK grocery retail market will continue to challenge the company's operating performance even with the benefits of the significant restructuring actions."
"Moreover, we think that the company's efforts to stabilise the UK operations and to protect the balance sheet, while helpful, will take time to implement."
What did the commentators say?
Tesco also came under fire from Pat McFadden, MP for the deprived Wolverhampton South East constituency. The area is one of 49 in which Tesco have abandoned plans to build new outlets.
"This decision is a betrayal of the people of Wolverhampton and a clear breach of the promise made to the people of the city." said McFadden. "Less than a year ago, the UK managing director of Tesco gave a pledge on behalf of the company that this investment would go ahead in the coming financial year.
What next?
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Mischa graduated from New College, Oxford in 2014 with a BA in English Language and Literature. He joined MoneyWeek as an editor in 2014, and has worked on many of MoneyWeek’s financial newsletters. He also writes for MoneyWeek magazine and MoneyWeek.com.
-
Which investments can I hold in a stocks and shares ISA – and which ones are banned?
HMRC has a list stating which investments are allowed in ISAs, but sometimes investors, and even ISA providers, get confused by the rules. Here’s what you need to know when picking your investments.
By Ruth Emery
-
Review: Andronis Minois and Andronis Arcadia – two Greek island idylls
Travel Andronis Minois on Paros and Andronis Arcadia on Santorini are two beautiful, authentic hotels on two different islands in Greece
By Nicole García Mérida
-
How to profit from rising food prices: which stocks should you invest in?
Tips Food prices are rising – we look at the stocks to avoid and the one to invest in this sector.
By Bruce Packard
-
Tesco looks well-placed to ride out the cost of living crisis – investors take note
Analysis Surging inflation is bad news for retailers. But supermarket giant Tesco looks better placed to cope than most, says Rupert Hargreaves.
By Rupert Hargreaves
-
Tesco sells its retail subsidiary in Thailand and Malaysia for £8bn
News Tesco has agreed to sell its southeast Asian operations to Thai conglomerate Charoen Pokphand for £8.2bn in cash.
By Dr Matthew Partridge
-
Tesco should keep its Asian assets
Opinion The £7bn that Tesco could get for its Tesco Lotus business in Asia looks enticing. But holding on to it would be smarter, says Matthew Lynn.
By Matthew Lynn
-
Share tips of the week
Features MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
By moneyweek
-
Tesco wields the axe
Features Britain’s biggest supermarket is cutting back on staff and fresh food. Will the move prove counterproductive? Matthew Partridge reports.
By Dr Matthew Partridge
-
If you'd invested in: Tesco and Associated British Foods
Features Tesco has seen its market value rise almost 50% in a year, while AB Foods has seen shares slide despite a rise in profits.
By Alice Gråhns
-
What's behind Tesco’s alliance with Carrefour?
Features Tesco is clubbing together with French rival Carrefour to bulk buy own-label goods in an effort to cut costs. Will it succeed? Ben Judge reports.
By Ben Judge