S&P lifts Office Depot

Standard & Poor's said it upgraded Office Depot, Inc.'s speculative-grade liquidity rating to SGL-1 from SGL-2 and affirmed the B2 corporate family and probability of default ratings.

The outlook is negative.

The upgrade of the speculative-grade liquidity rating recognizes Office Depot's significant cash balances and ample availability on its $1.25 billion unrated asset-based revolving credit facility, as well as no debt maturities until August 2013, the agency said.

"We feel that while Office Depot still faces significant operating challenges and very weak credit metrics, which are the drivers behind the B2 corporate family and probability of default ratings, and the primary basis for the negative outlook, liquidity is a definite source of rating strength," stated Moody's senior analyst Charlie O'Shea.

"The large cash balance, resulting from reductions in expenses and inventory, as well as the excess proceeds from the 2009 convertible debt offering, provides support."

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