Moody's assigns CSK Auto convertibles, notes Ba3

Moody's Investors Service said it assigned a Ba3 rating to CSK Auto, Inc.'s new $100 million senior convertible notes due 2025 and $125 million senior unsecured notes due 2025 and affirmed other existing ratings, including the SGL-2 speculative-grade liquidity rating.

The outlook remains stable.

The agency noted it affirmed the company's corporate family rating at Ba3 and $225 million subordinated notes at B2.

Moody's said this rating action follows CSK's acquisition of Murray's Auto Parts for about $170 million and added that the affirmation is based on CSK's relatively stable operating performance, its practice of utilizing free cash flow to repay debt, which has resulted in metrics that, while strained for this acquisition due to the debt-financing, remain reasonable for the Ba3 rating as a result of the cushion created by past repayments.

Ratings also consider the risks inherent in the integration of any acquisition, as well as the competitive environment and CSK's somewhat concentrated geographic profile, the agency noted.

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