Moody's upgrades Rite Aid

Moody's Investor Service said it upgraded Rite Aid Corp.’s $3.7 billion asset-based revolving credit facility to Ba2 (LGD2) from Ba3 (LGD2), $650 million senior secured first-lien notes due 2020 to Ba2 (LGD2) from Ba3 (LGD2) and senior unsecured guaranteed notes to B3 (LGD5) from Caa1 (LGD5).

The agency confirmed the company’s corporate family rating at B2, probability of default rating at B2-PD and $500 million senior secured second-lien term loan due 2021 and $470 million senior secured second-lien term loan due 2020 at B2 (LGD3). The speculative grade liquidity rating was affirmed at SGL-2.

This concludes the review for downgrade that began on Feb. 11, and the outlook is stable.

The confirmation of Rite Aid's B2 corporate family rating reflects Moody's expectation that Rite Aid will maintain debt to EBITDA below 7 times after closing the acquisition of Envision Pharmaceutical Holdings, Inc.(B3/stable) and that the Envision acquisition will be run as a standalone subsidiary by its existing management team, resulting in de minimus integration risk.

The upgrade of Rite Aid's asset-based revolver and first-lien notes reflects the additional capital support provided by the $1.8 billion of senior unsecured notes that Rite Aid intends to issue to finance the transaction, the agency said.

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