Fitch, the ratings agency, last night slashed Allied Domecq's £1.7bn (€2.48bn) of debt to junk status and claimed that bondholders will be the main casualties of the UK drinks giant's recommended £9.1bn takeover bid from French rival Pernod Ricard.

Fitch changed its rating on Allied's bonds to high double-B, the top junk rating, down two notches from triple-B. Rival rating agencies Moody's and Standard & Poor's, which both rate Allied as a high triple-B investment grade borrower, were more cautious. The two agencies did not downgrade Allied, although they warned of a potential rating cut. Pernod is unrated.