Moody's Investors Service upgraded all ratings of BJ's Wholesale Club Holdings Inc., including its corporate family rating, after the warehouse retailer used the proceeds from its IPO to repay a $625 million loan.
BJ's Wholesale Club's corporate family rating was upgraded to B1 from B3. The outlook is stable.
"As a result of this repayment, BJ's credit profile improves dramatically, with debt/EBITDA at the May 2018 LTM reducing to around 5.4x pro-forma for the repayment from the actual 6.2x level," Moody's Vice President Charlie O'Shea said.
Moody's said that the B1 rating takes into account BJ's competitive position in its chosen markets, which has been aided by Walmart Inc.'s decision to close 63 Sam's Club warehouse stores, about 25 of which are in BJ's markets.
The rating also recognizes the company's now-66% financial sponsor ownership, strong execution ability, sound strategy and relatively benign online sales environment, the rating agency said.
The stable outlook reflects Moody's expectation that BJ's financial policy will take on a more passive tone with the completion of this IPO, and as such credit metrics will be managed and maintained within a relatively tight band.
The Massachusetts-based company, which priced its IPO at $17 per share, began trading June 28.