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Published on 2/3/2016 in the Prospect News Investment Grade Daily.

Fitch rates Home Depot notes A

Fitch Ratings said it assigned an A rating to the Home Depot Inc.'s proposed issuance of up to $3 billion of senior unsecured notes.

The company plans to issue the notes in two tranches, including a five-year tranche and a 10-year tranche.

The proceeds will primarily be used to refinance existing debt.

The ratings reflect the strong improvement in Home Depot's comparable store sales, operating margins and free cash flow over the past five years, Fitch said.

The ratings also consider an expectation that the company will be able to sustain this performance going forward, the agency said.

Compared to its nearest competitor, Home Depot has generated superior operating margins and consistently stronger comps over the past five years, Fitch said.

The ratings further reflect Home Depot's leading position in the home-improvement retail sector in North America and steady adjusted debt-to-EBITDAR at or less than 2x, the agency said.


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