NEW YORK — Moody's Investors Service here said it was assigning its first ratings to Sprouts Farmers Market, Phoenix — a B2 rating, with a stable outlook — as the chain acquires Henry's Farmers Market, Los Angeles.
Moody's said the B2 corporate family rating reflects Sprouts' "high leverage, relatively small scale, aggressive growth strategy, increased amount of funded debt and financial policy risk."
The rating also reflects Sprouts' "attractive market niche and good operating performance in a challenging economic and competitive environment," Moody's added.
Moody's also gave a B2 rating to a proposed $310 million senior secured term loan and a $60 million senior secured revolving credit facility.
Sprouts was assigned a stable outlook, reflecting Moody's belief the retailer's operating performance will not meaningfully improve nor deteriorate over the next year, it noted.
Once Sprouts completes its acquisition of Henry's from Los Angeles-based Smart & Final, the chain will operates 98 stores in Arizona, California, Texas and Colorado.
