Moody's rates Whole Foods loan Ba1

Moody's Investors Service said it assigned Ba1 corporate family and probability-of-default ratings to Whole Foods Market, Inc. and a Ba1 (LGD3, 47%) rating to its $700 million secured term loan due 2012.

The outlook is stable.

The agency said Whole Foods' Ba1 rating balances non-investment-grade credit metrics against the company's compelling business model, industry-leading comparable-store sales growth and profit margins and productive store base. Whole Foods is the market leader in high-quality perishables and organic food offerings. Furthermore, the company generates solid cash flow, which has been generally used to fund internal operating expense and the company's aggressive capital expenditures.

The ratings also reflect Moody's concern that Whole Foods' service-oriented culture and management may potentially be strained as the company continues its rapid expansion and as the competition in natural and organic sections intensifies. The ratings are also constrained by high leverage metrics, moderate scale in terms of revenues and possible integration risks over the next two years, the agency added.

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