The idea that debt markets may be starting to relax again looked like a triumph of hope over experience as renewed attempts by Alliance Boots’ lenders to offload loans came to nought.

Despite the syndicate of lenders’ willingness to sell some of the£780 million debt at below face value and apparent interest from potential buyers such as hedge funds, it proved impossible to shift.

The problem was the terms of a deal. Would-be buyers wanted assurances that they would be compensated in the event that the lenders sold debt on at a lower price. That put the frighteners on some members of the syndicate, who did not want their future options to be limited – especially if the market worsens again.

What the situation reveals is that the incendiary loss of trust between financial institutions ignited by the credit crunch has not yet burned itself out.

So what does it mean for retailers? For Alliance Boots, the failure of the banks to offload debt makes no difference to its financial or trading position. But for private-equity-backed retailers generally, it means that exit routes and opportunities for refinancing remain limited. And quoted retailers carrying big debts can expect continued forensic scrutiny at best or still to be shunned at worst.

But there is a reason to be cheerful. It is understood that Alliance Boots’ backers will come back with a revised syndication offer within days. That shows there is hunger for a deal to be done. If they pull it off, it will be a sign that conditions in the financial markets are stabilising.

That wouldn’t get retailers out of the woods on its own. The stores sector is unlikely to be out of the doldrums until some time next year. But it would at least be an improvement to the financial strictures within which stores operate.

Welcome sunshine

The bank holiday sunshine should have helped B&Q and Homebase last weekend. An early Easter, made worse by snow, undermined the start to the DIY year, so there was a lot riding on the first May bank holiday.

Both big home-enhancement chains, owned by Kingfisher and Home Retail respectively, have longstanding problems to address. But, if operational improvements are starting to show through, a little luck at such an important time of the year should help morale and momentum.

George MacDonald is deputy editor of Retail Week

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