Fitch assigns BBB to Kroger debt

Fitch Ratings said it assigned a rating of BBB to Kroger Co.'s multi-tranche $1.1 billion debt issuance.

The outlook is stable.

The notes rank pari passu with existing debt and are being issued under Kroger's indenture dated June 25, 1999.

Proceeds will be used in part to refinance the debt used to fund the acquisition of Roundy's, Inc., which closed Dec. 18, 2015.

Fitch said Kroger generates industry-leading non-fuel identical store (ID) sales growth, which has led to market share gains in most of its major markets. Non-fuel ID sales have been positive for 12 consecutive years and have accelerated in recent periods due mainly to an increase in customer visits. ID sales increased 5.5% during the three quarters ended Nov. 7, 2015, after rising 5.2% in 2014, 3.6% in 2013, and 3.5% in 2012.

Growth has been due to positive pricing perception by customers, effective marketing through use of loyalty card data, and improvements to the shopping experience. Fitch expects Kroger will maintain low- to mid-single-digit ID sales growth of 3% to 4% over the next 24 to 36 months.

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