S&P Global Ratings expects to maintain Aeon Mall (TYO:8905) at its current BBB rating if it becomes a wholly owned subsidiary of parent Aeon (TYO:8267), according to a Tuesday release.

The Japan-based mall operator said it will begin discussions with its retailer parent on becoming a wholly owned subsidiary via an exchange of stock.

Despite having a stronger standalone credit profile compared with the group, Aeon Mall's rating is limited by that of its parent due to the likelihood of the mall operator extending emergency support to the group, S&P said.

The process will enhance integration, which will somewhat boost the mall operator's business competitiveness and profitability amid challenges from competition and inflation, S&P said.

Aeon Mall's ongoing overseas investments will maintain a high financial burden, but S&P expects the company to prioritize financial discipline as part of the broader Aeon group.

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