Moody's rates Michaels bonds Caa1

Moody's Investors Service said it assigned a Caa1 rating (LGD5, 76%) to Michaels Stores, Inc.'s proposed $750 million senior unsecured bonds due 2018.

The outlook is stable.

Proceeds will be used to tender for $750 million series of unsecured notes.

The refinancing improves the maturity profile of the company but has no impact on Michaels' current capital structure or ratings, according to the agency.

Michaels' B3 corporate family rating reflects its significant financial leverage and weak credit metrics, the agency said, as well as its leadership position in the highly fragmented arts and crafts segment, and its high operating margins.

Michaels' ratings also reflect its good liquidity with limited near term debt maturities, the agency noted.

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