S&P lowers Sears notes to CCC-, CCC+

Standard & Poor's said it assigned its B issue-level rating to Sears Roebuck Acceptance Corp.’s and Kmart Corp.'s proposed $750 million senior secured asset-based lending (ABL) term loan due 2020, with a 1 recovery rating, indicating an expectation for very high (90% to 100%) recovery in the event of default.

S&P also lowered its issue-level rating on Sears Holdings Corp.'s 8% senior notes due 2019 to CCC- from CCC after revising the recovery rating to 6 from 5. The 6 recovery rating indicates an expectation for negligible recovery (0% to 10%) in the event of default.

Similarly, the agency lowered the ratings on Sears Roebuck 's senior notes series due 2017 to 2043 to CCC+ from B as a result of revising the recovery rating to 3 from 1. The 3 recovery rating indicates an expectation for meaningful recovery in the event of default (lower half of the 50% to 70% range).

The issue-level and recovery ratings on Sears Holdings’ existing ABL revolving credit facility and term loan remain unchanged at B and 1, as do the B issue-level and 1 recovery rating on Sears' 6 5/8% second-lien notes.

Sears intends to use net proceeds from the ABL term loan to repay borrowings under the existing revolving credit facility. About $1.3 billion of the revolving facility commitments will expire in April 2016, leaving about $2 billion that expire in July 2020.

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