Fitch lowers SuperValu notes

Fitch Ratings said it affirmed SuperValu Inc.'s long-term issuer default rating at B and secured debt rating at BB with recovery rating of RR1 following the Dec. 5 divestiture of Save-A-Lot and subsequent review of SuperValu’s post-separation capital structure.

Fitch also simultaneously downgraded the rating on SuperValu’s senior unsecured notes to B- with recovery rating of RR5 from B with recovery rating of RR4.

The outlook is stable.

The ratings are constrained by negative sales trends, declining operating income, a mediocre retail market position and long-term challenges within the retail and wholesale business, even though the company's leverage is low for the rating category, Fitch said.

Such challenges include retailer consolidation in the grocery retail industry, potential customer losses as the number of independent retailers decline and heightened competition, the agency said.

Fitch said it expects the company’s total adjusted debt-to-EBITDAR will increase to the mid-4x range by fiscal 2019.

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