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Moody’s lifts Dollar Tree, facilities, notes
Moody's Investors Service said it upgraded Dollar Tree Inc.'s corporate family rating to Ba1 from Ba2 and probability of default rating to Ba1-PD from Ba2-PD.
The speculative grade liquidity rating was affirmed at SGL-1.
Additionally, the agency upgraded the company's senior secured bank credit facilities and the Family Dollar legacy notes to Baa3 from Ba1 and the senior unsecured notes to Ba2 from Ba3.
The outlook is positive.
Moody’s said the upgrade reflects its assessment that the integration of the acquired Family Dollar operations and store base has been smooth and in line with expectations.
The upgrade also reflects the consistent and sustained improvement in credit metrics through increased EBITDA generation and debt prepayments. The company prepaid $990 million of debt in fiscal 2017 on top of a previous $1 billion prepayment in fiscal 2016.
"Dollar Tree's strong operating performance and cash flow generation demonstrates that the integration of Family Dollar stores is continuing as planned," Moody's vice president Mickey Chadha said in a news release.
"The company's business model is resonating with consumers as it continues to grow its top-line and margins and simultaneously strengthen its balance sheet through debt prepayments."
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