S&P rates Sears notes CCC-

Standard & Poor’s said it assigned CCC- issue-level and 6 recovery ratings to Sears Holdings Corp.’s $625 million 8% senior unsecured notes due 2019. The 6 recovery rating indicates an expectation for negligible (0% to 10%) recovery in the event of payment default.

At the same time, S&P lowered the preliminary rating on Sears Holdings’ senior unsecured shelf registration to CCC- from CCC+. The CCC+ corporate credit rating and negative outlook on the company remain unchanged.

S&P also revised its recovery rating on Sears Roebuck Acceptance Corp.’s (SRAC) senior unsecured notes to 4 (30% to 50% recovery) from 3 (50% to 70% recovery). The SRAC notes, which had a principal balance of about $327 million as of Sept. 30, 2014, benefit from a Sears Roebuck subsidiary guarantee but not from any Kmart subsidiary guarantees.

The issue-level and recovery ratings on Sears’ first-lien obligations, which include the $3.275 billion ABL credit facility due 2016 and $1 billion term loan due 2018, remain unchanged at B and 1. The issue-level and recovery ratings on Sears' $1.25 billion 6 5/8% second-lien notes due 2018 also remain unchanged at B- and 2.

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