Picard - Affirming our corporate rating at B+

RATING RATIONALE

· We affirm our rating on Picard Bondco S.A. (‘Picard’) at B+.

· Our rating is constrained by Picard’s very high net adjusted leverage, which we expect to be 5.4x at YE16/17 (31 March 2017). This level primarily results from the large dividend recapitalization transaction in 2015 where Picard paid a c. €600m dividend to its shareholders. Other limiting factors include Picard’s low geographical diversification with 98% of sales made in France, its relatively small scale compared to main food retailers, and risks related to the international expansion and the brand's recognition in new markets. Picard is also exposed to regulatory/sanitary risks inherent with the industry, which could hurt its reputation (e.g.: the horsemeat scandal in Feb. 2013 materially weighed on sales and margins).