Fitch applies BBB+ to Kohl’s notes

Fitch Ratings said it assigned a BBB+ rating to Kohl's Corp.’s $1.1 billion issue of 10-year and 30-year senior unsecured notes.

Proceeds will be used for the tender offer of $767 million of outstanding notes and debentures, which consists of $332 million of 6.25% notes due 2017, $200 million of 6.875% notes due 2037, $134 million of 6% debentures due 2033 and $101 million of 7.25% debentures due 2029. Kohl's will redeem the remaining $318 million of notes due 2017 through a make-whole call provision and pay the premium with cash on hand.

The outlook is stable.

Fitch said the rating and stable outlook reflects the company's strong market share position as the third-largest department store retailer in the U.S., convenient off-mall store format, strong EBITDA margin in the 13.8% to 14% range and strong free cash flow generation.

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