Moody's gives KeHE notes B3

Moody's Investors Service said it assigned a B2 corporate family rating and a B2-PD probability of default rating to KeHE Distributors, LLC.

Concurrently, Moody's assigned a B3 rating to the company's proposed $200 million second-lien notes due 2021.

The outlook is stable.

"Although KeHE has a good market position in a growing and attractive market niche for specialty, organic and natural foods, it is a relatively small player in the overall food distribution business segment and could be vulnerable if larger broadline food distributors enter its niche market," Moody's senior analyst Mickey Chadha said in a news release.

"Moreover, being a distributor the company has thin margins and the loss of a big customer could have a significant negative impact on profitability and credit metrics," Chadha added in the release.

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