Fitch rates Safeway notes BBB

Fitch Ratings said it rated Safeway Inc.'s $500 million 6¼% senior unsecured notes due 2014 BBB.

The outlook is stable.

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

Ratings reflect Safeway's strong market positions in its key markets, its successful store strategy resulting in positive operating trends and good cash flow generation, and management's dedication to reducing debt over the past few years, the agency said.

Also considered is the level of competition in the sector and the economic environment, which could pressure operating profitability over time, the agency noted.

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