S&P lifts RadioShack to CCC+, drops notes

Standard & Poor's said it raised the corporate credit rating on the RadioShack Corp. to CCC+ from CCC.

The outlook is negative.

At the same time, the agency lowered the issue-level rating on the senior unsecured notes to CCC- from CCC and revised the recovery rating to 6 from 4. The 6 recovery rating indicates an expectation of negligible (0%-10%) recovery of principal in the event of payment default.

The notes are now rated two notches below the company's corporate credit rating.

"The upgrade reflects an improved liquidity position with a recent financing that increased funded debt by $125 million and increased the company's revolving credit borrowing capacity, which improved the company's liquidity by approximately $200 million," S&P credit analyst Charles Pinson-Rose said in a news release.

"Year-to-date working capital has been a meaningful source of cash as well, about $300 million. While we realize working capital may be a use of cash going forward and that the company will need to fund likely cash operating losses, we do not believe a default in the near term is likely."

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