Fitch cuts Sears

Fitch Ratings said it downgraded Sears Holdings Corp.'s long-term issuer default rating to B+ from BB- and affirmed its secured bank facility at BB+ with recovery rating of RR1 and second-lien secured notes at BB+ with recovery rating of RR1.

Sears, Roebuck and Co.'s long-term issuer default rating was downgraded to B+ from BB-.

Sears Roebuck Acceptance Corp.'s long-term issuer default rating was downgraded to B+ from BB-, along with its senior unsecured notes to B+ with a recovery rating of RR4. Its short-term issuer default rating was affirmed at B and its commercial paper rating at B.

Sears DC Corp.'s long-term issuer default rating was downgraded to B+ from BB- and senior unsecured notes to B+ with a recovery rating of RR4, from BB.

Kmart Holding Corp.'s long-term issuer default rating was downgraded to B+ from BB-.

The outlook is stable.

The downgrades reflect worse-than-expected deterioration in EBITDA in the second half of 2010, Fitch said, and as a result its adjusted debt-to-EBITDAR ratio is now expected to be in the 4.3x to 4.5x range for the full year versus prior expectations of leverage remaining within the 4x range.

Fitch said it expects domestic comparable store sales trends will continue to remain pressured, with trends being particularly disappointing at Sears domestic.

The ratings reflect the company's broad market presence in the moderate department store, hard line and discount retail segments and strong proprietary brands, the agency said.

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