Fitch lowers Sears unsecured notes

Fitch Ratings said it affirmed the long-term issuer default ratings on Sears Holdings Corp. and its various subsidiary entities at CC.

The agency also affirmed the CCC+ with recovery rating of RR1 on Sears’ $302 million second-lien secured notes and the C rating with recovery rating of RR1 on its $625 million unsecured notes.

The agency also said it downgraded the senior unsecured notes of Sears Roebuck Acceptance Corp. to C with recovery rating of RR6 from CC with recovery rating of RR4.

Also affirmed was Kmart Holding Corp.’s long-term issuer default rating at CC, along with Kmart Corp.’s long-term issuer default rating at CC and CCC+ ratings with recovery ratings of RR1 on its $1.971 billion secured bank facility and $1.7 billion first-lien term loans.

The agency said it expects the company’s comparable store sales to be in the negative 8% in 2016 and negative high single digit range in 2017.

Overall, the company’s top-line is expected to decline 12% to 13% in both years as Sears continues to close stores, Fitch said.

As a result, the agency said it expects EBITDA to be negative $950 million to $1 billion in 2016 and 2017, compared with a loss of $836 million in 2015.

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