Moody's rates Rite Aid loan Ba3, notes B3

Moody's Investors Service said it assigned a Ba3 (LGD2, 24%) rating to Rite Aid Corp.'s $350 million senior secured term loan tranche 2 due 2014 and a B3 (LGD4, 52%) rating to its $425 million senior secured notes due 2016.

The outlook is negative.

Proceeds will be used to repay its 8 1/8% senior secured notes due 2010, 7½% senior secured notes due 2015 and 9¼% senior notes due 2013.

Rite Aid's B3 ratings reflect the company's weak credit metrics along with expectation that its internal free cash flow will likely remain negative making the company heavily reliant on its external sources of liquidity, according to the agency.

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