S&P upgrades Kroger

Standard & Poor's said it raised the corporate credit and senior unsecured ratings on Kroger Co. to BBB from BBB- and removed its ratings from CreditWatch where they were placed on Aug. 12.

The short-term commercial paper rating was upgraded to A-2 from A-3.

The outlook is stable.

"The ratings action reflects our belief that the company's financial policy will be managed appropriately, and that 2009 credit metrics, after adjusting for multi-employer pension deficits, will still be consistent with a BBB rating given the company's satisfactory business profile. Lease adjusted debt to EBITDA for 2009 is expected to marginally improve to 3x - or 3.3x after including multiemployer pension deficits," S&P analyst Stella Kapur said in a statement.

Ratings reflect the company's position as the largest conventional supermarket operator in the United States, strong market positions, geographic and format diversity, and an intermediate financial risk profile, the agency said.

These strengths are somewhat mitigated by its participation in the highly competitive supermarket industry and a weaker economy, which has resulted in consumers paring back on discretionary and higher priced items, the agency noted.

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