S&P ups Albertsons notes, rates facilities BB-

S&P said it assigned a B corporate credit rating to Albertsons Cos. Inc., the surviving entity that B-rated Albertsons Cos. LLC merged into. The outlook is stable.

The corporate credit rating on Rite Aid Corp. remains B.

At the same time, the agency assigned BB- issue-level ratings to the company's new $5 billion asset-based lending facility, ABL FILO term loan and secured bridge loan facility.

S&P also affirmed the BB- rating on Albertsons' existing term loan B debt. The 1 recovery rating indicates an expectation for very high (90%-100%; rounded estimate: 95%) recovery.

The agency raised the issue-level rating on Albertsons’ existing $2.5 billion senior unsecured notes maturing in 2024 and 2025 to B+ from B and revised the recovery rating to 2 from 4, indicating substantial (70%-90%; rounded estimate: 85%) recovery.

S&P also raised the issue-level rating on the existing Safeway notes to B from CCC+ and revised the recovery rating to 4 from 6 to reflect an expectation for average (30%-50%; rounded estimate: 30%).

The agency raised the issue-level rating on the existing New Albertsons notes to B- from CCC+ and revised the recovery rating to 5 from 6 to reflect modest (10%-30%; rounded estimate: 10%) recovery.

S&P said the ratings on Albertsons reflect a view that despite projections for modest synergies and a track record of executing such synergies as demonstrated in its Safeway acquisition, there is significant execution risk in combining Rite Aid into the company's already complex, multi-bannered and challenged grocery business.

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