Gap says coupon on $700 million notes steps up 175 basis points on June 15

New York, June 7 - The Gap, Inc. said the coupon on $700 million of its outstanding notes will step up by 175 basis points on June 15 as a result of recent downgrades to its long-term credit ratings.

The San Francisco-based retailer said in a filing with the Securities and Exchange Commission that the coupon on its notes due 2005 will increase to 9.90% and on its 2008 notes to 10.55%.

On Feb. 14, Moody's Investors Service cut The Gap's long-term credit rating to Ba2 from Baa3 and Standard & Poor's cut it to BB+ from BBB+. Moody's further downgraded it to Ba3 on Feb. 27.

Both Moody's and Standard & Poor's have a negative outlook on the company's ratings.

The Gap noted that any further downgrades will result in further increases in the interest rates on the notes.

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