S&P rates A&P revolver B+

Standard & Poor's said it assigned its B+ rating to The Great Atlantic & Pacific Tea Co. Inc.'s (A&P) $400 million amended and restated revolving credit facility due December 2007. A recovery rating of 1 was also assigned to the facility.

Outstanding ratings on the company, including the B corporate credit rating, were affirmed.

The outlook is negative.

S&P said the rating on A&P reflects the company's poor profitability and high debt leverage, mitigated somewhat by its important market positions in Canada and the metropolitan New York area.

Although Canada is performing well, difficulties in U.S. markets have caused overall profitability to fall. Soft consumer spending and increasing competition from both conventional and nontraditional food retailers are pressuring the gross margin. Combined with rising costs, this has resulted in significant drops in operating profit over the past year.

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