Morrisons is bracing for a £95m hit as the cost of servicing its huge debt pile soars.
Market turmoil will see the embattled grocer face an additional £35m in annual interest payments on its £6.6billion of borrowing, credit rating agency Moody’s said.
It will face a further £60m shock if the Bank of England raises interest rates to 4.25 per cent, as economists expect. Each 0.25 percentage-point increase in the Bank’s lending rate will cost Morrisons an additional £7m to £8m, it said.
![Struggle: Since the £7billion deal, spearheaded by ex-Tesco boss Sir Terry Leahy (pictured), Morrisons has seen its market share tumble](https://i.dailymail.co.uk/1s/2022/10/02/20/63032539-11272753-image-m-23_1664739888894.jpg)
Struggle: Since the £7billion deal, spearheaded by ex-Tesco boss Sir Terry Leahy (pictured), Morrisons has seen its market share tumble
The huge spike in borrowing costs will raise further questions about the role of private equity firms, which rely on huge amounts of debt to fund takeovers, in the UK grocery market.
It is the latest blow for the retailer since it fell into the hands of US private equity shark Clayton, Dubilier and Rice last year.
Since the £7billion deal, spearheaded by ex-Tesco boss Sir Terry Leahy, the Bradford-based grocer has seen its market share tumble and lost its coveted spot in the ‘Big Four’ of UK supermarkets to discounter Aldi.
A source close to CD&R told The Sunday Times that Morrisons had access to substantial cash.