Fitch assigns A+ to Costco notes

Fitch Ratings said it assigned an A+ rating to Costco Wholesale Corp.’s issuance of $1 billion four-year senior unsecured notes due 2021, $800 million five-year senior unsecured notes due 2022, $1 billion seven-year notes due 2024 and $1 billion 10-year notes due 2027.

Proceeds will be used to finance Costco's $7 per share (around $3.1 billion) special dividend.

The notes, which are being issued under Costco's first supplemental indenture dated March 20, 2002, which supplements the original indenture dated Oct. 26, 2001, rank pari passu with Costco's existing debt, and contain a change-of-control triggering event provision.

Fitch said the ratings reflect Costco's top-three market position in North America food retailing with over 700 high-volume warehouses that generate nearly $119 billion in revenue, industry-leading comparable sales (comps), robust cash flow, and low financial leverage.

Total adjusted debt/EBITDAR was 1.2 times for the latest 12 month (LTM) period ended Feb. 12. Pro forma for the $3.8 billion debt issuance and subsequent repayment of $1.1 billion of 1.125% notes maturing Dec. 15, 2017, total adjusted debt/EBITDAR is 1.7 times.

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