Moody’s Investors Service, New York, said Thursday it has upgraded Supervalu’s debt ratings and changed the company’s outlook to positive.

Moody’s said the positive ratings outlooks reflects the expectation that new management’s strategic initiatives will continue to improve Supervalu’s profitability and credit metrics in the next 12 to 18 months.


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“The initiatives in the last year have proven successful in stabilizing and improving the company’s operating performance, resulting in a stronger credit profile,” Moody’s added.

The changes to the company’s credit profile included the following:

• Upgrading its corporate family rating to B2 from B3.

• Upgrading the company’s probability of default rating to B2-PD from B3-Pd.

• Upgrading its speculative grade liquidity rating to SGL-1 from SGL-2.

Moody’s also said it was affirming the B1 rating of Supervalu’s $1.5-billion senior secured term loan maturing in 2019; the Caa1 rating of its $628-million senior unsecured notes maturing in 2016; and the Caa1 rating of its $400-million senior unsecured notes maturing in 2021.

According to Moody’s, Supervalu’s move to refinance a portion of the unsecured notes maturing in 2016 and amendments to the term loan and asset-based-lending revolving credit facility eliminated the springing maturity provision and lowered the cost of debt, thereby enhancing the company’s liquidity.

Moody’s said the B2 corporate family rating reflects the challenges associated with the growth of the company’s independent business, which accounts for about half of sales and which has experienced a revenue decline due to lower sales to existing customers. It said there are also risks associated with Supervalu’s transition services agreements with Albertsons not being extended beyond their initial term in September 2015.

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