Fitch Ratings on Feb. 20 placed Rite Aid Corp.'s B-long-term issuer default rating on "rating watch evolving," following the announcement that U.S. grocer Albertsons intends to purchase the Pennsylvania-based drugstore chain.

The rating watch will also affect its BB/RR1-secured revolving credit facility, B/RR4-guaranteed senior unsecured notes and CCC+/RR6-non-guaranteed senior unsecured notes. The rating agency withdrew Rite Aid's BB/RR1- secured term loans rating after the chain announced repayments for its second lien term loans.

Fitch expects to resolve the rating watch once the Albertsons transaction concludes, noting it expects Rite Aid will need to refinance about $2.5 billion in debt at closing. It also said that it may update or withdraw ratings after the closing of the sale of stores to Walgreens Boots Alliance Inc.

The ratings agency said a combined Albertsons and Rite Aid would generate $80 billion in revenue and $2.9 billion in EBITDA. And based on Albertsons' business, Fitch suggests close to $4 billion in EBITDA in three years, adding that the improvement could bring the merger to a B-rated retailer for its size and operating characteristics.