Fitch rates Kroger notes BBB

Fitch Ratings said it assigned a rating of BBB to Kroger Co.'s $800 million issue of 10- and 30-year notes.

The outlook is stable.

Proceeds will be used to repay long-term debt and for general corporate purposes.

The rating reflects Kroger's industry-leading sales growth and market share gains, strong cash flow and steady credit metrics, the agency said.

The rating also considers the company's ongoing share repurchase activity and intense price competition in the sector that will continue to pressure gross margins, the agency noted.

Kroger's financial leverage, of lease-adjusted debt to EBITDAR, was steady at 3.0 times as of the end 2011, consistent with the prior three years, Fitch said.

Kroger benefits from the geographic breadth and diverse formats of its store base, the agency said.

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