Moody's boosts Home Depot

Moody's Investors Service said it upgraded Home Depot, Inc.'s senior unsecured rating to A3 from Baa1 and affirmed the commercial paper rating of Prime-2.

The outlook is stable.

The upgrade acknowledges the view that Home Depot's continued strong operating performance is sustainable as supported by Home Depot's announced second upward revision of its 2011 earnings guidance as well as its improved execution, according to the agency.

"Home Depot's significant improvement in its in-store shopping experience and supply chain will continue to benefit its earnings," Maggie Taylor, a senior credit officer at Moody's, said in a statement.

The A3 senior unsecured rating reflects Home Depot's considerable scale and its strong market position as the largest dedicated home improvement retailer, the agency said.

The rating also reflects Home Depot's notably improved execution, which has resulted in its comparable store sales outperforming Lowe's for the past nine quarters and its credit metrics improving, the agency noted.

The A3 reflects an expectation that there will be no change in Home Depot's clearly stated moderately conservative financial policy, including its very good liquidity, 2.0 to 2.5 times lease-adjusted debt-to-EBITDAR leverage target and a 40% dividend payout ratio, Moody's said.

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