Iceland Foods has said it remains “incredibly well positioned”, despite the decision by Coface to temporarily suspend credit insurance cover to some of the supermarket’s suppliers.
The Sunday Times first reported that the French credit insurance provider was no longer insuring suppliers providing services to Iceland, following concerns about the impact of the rising energy costs on the frozen food specialist.
An Iceland spokesperson told The Grocer the decision had only affected a “handful” of suppliers, with which it has been working for the past three months.
“There are many credit insurers in the market, and we know of over £150m of Iceland credit cover still available in the market,” they said.
The spokesperson also said Coface was already looking to reinstate this cover.
The French insurer is the third insurer known to have limited its exposure to Iceland over the past few months after Allianz and Atradius both cut coverage to the supermarket in November 2022, leading to some speculation that the decisions are linked to the retailer’s £717m net debt.
However the spokesperson said: “All credit insurers have reduced cover across UK food retail, not just Iceland, over the past six months,” adding that Iceland was “incredibly well positioned” with over £200m of available liquidity.
Iceland has around £550m of bonds that need to be repaid by 2025 and any difficulty in refinancing could potentially open the door to activist investors.
Iceland’s debt rating was downgraded from a B2 to a B3 by Moody’s in August 2022, after it reported a accounts showed that £4.1m loss in the 12 months to March 2022, down from a £73.1m profit the previous year.
Iceland’s third quarter results are set to be posted to bond holders on Wednesday.
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