Moody’s rates Albertsons loan Ba2, notes B3

Moody’s Investors Service said it assigned a Ba2 (LGD 2) rating to Albertsons Cos., LLC’s new proposed new $1.5 billion senior secured term loan due in 2023 and B3 (LGD 5) rating to its proposed new $1.25 billion senior unsecured notes due in 2024.

Moody’s also said it upgraded the rating of the company’s existing senior secured term loans due in 2021 to Ba2 from Ba3 and downgraded the Safeway, Inc. legacy notes to B3 from B2.

All of the other ratings, including the company’s B1 corporate family rating and B1-PD probability of default rating, are affirmed.

The outlook remains stable.

The proceeds of the new term loan and the new notes will be used to refinance the company’s second-lien notes due in 2022 and senior secured term loans due in 2019, Moody’s said.

Although the company has outperformed expectations, its credit metrics remain weak with debt-to-EBITDA ratio at about 7.5x at the end of fiscal 2015, the agency said.

Moody’s said it expects momentum in same-store sales growth and cost efficiencies to continue to boost profitability, resulting in improved credit metrics with debt-to-EBITDA expected to be about 6x in the next 12- to 18-months.

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