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Fitch assigns AA rating to Wal-Mart's $6B senior notes


According to Market Intelligence, December 2022


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Fitch assigns AA rating to Wal-Mart's $6B senior notes

Fitch Ratings assigned an AA rating to Wal-Mart Stores Inc.'s issuance of $6 billion senior unsecured notes, which the company will use to help fund its cash tender offer of $8.5 billion notes maturing 2019-2043.

Wal-Mart's rating, along with a stable outlook, is the highest among retail and consumer companies, due to the company's scale and market position, according to the Fitch note released to clients Oct. 11. The multitranche issuance includes two-year, three-year, five-year, seven-year and 30-year senior unsecured notes, the ratings analysts said.

The rating comes a day after Wal-Mart's annual investor day on Oct. 10. Before the meeting, Wal-Mart announced a $20 billion share repurchase program, which the company expects to utilize in about two years.

The analysts said the rating reflects Wal-Mart's financial flexibility and strong cash flow "that result from its substantial scale and dominant market position in North America." The rating also considers Fitch analysts' view that margins will stabilize around the mid-6% range in 2017.

"Wal-Mart is making the appropriate actions to drive long-term sales growth while using its significant power vis-a-vis suppliers and other counter-parties to support near-term cash flow with working capital improvements," the analysts said.

The Fitch analysts expect physical stores to continue to dominate most of Wal-Mart's revenue, but they noted that the big-box retailer is increasing its competitiveness in e-commerce through increased online offerings, a rise in distribution centers, free two-day shipping and the 2016 acquisition of