S&P upgrades Dollar Tree, loans, notes

Standard & Poor's said it raised its corporate credit rating on Dollar Tree Inc. to BB+ from BB.

The outlook is stable.

Concurrently, the agency raised the issue-level rating on the company's senior secured debt to BBB from BB+ and revised the recovery rating to 1 from 2, indicating an expectation for very high (90%-100%) recovery in the event of a payment default. This includes the company's revolver, term loan A, term loan B and legacy Family Dollar notes.

S&P also upgraded its issue-level rating on Dollar Tree's senior unsecured notes to BB- from B+. The recovery rating is 6, indicating negligible (0% to 10%) recovery in the event of a payment default.

"The upgrade reflects our view that Dollar Tree will reduce debt through available cash flow generation in the coming year with about $1 billion in pay down this month. It will also continue to successfully integrate and improve Family Dollar stores through strategic new store growth, closures, and re-bannering initiatives," S&P credit analyst Diya Iyer said in a news release.

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