Fitch Ratings on Oct. 16 assigned an A- rating to Target Corp.'s issuance of $750 million 30-senior unsecured bonds, with a negative outlook.
The company will use proceeds to fund the cash tender offer of long-dated existing bonds.
The agency attributed the rating to company's strong U.S. market position, brand name and financial leverage. Fitch said the negative outlook reflects the accelerated impact changes in consumer shopping preference is having on Target's near-term results and the investments required to stabilize market share in the longer term.
The agency said the outlook could stabilize if the retailer gains traction on its strategic initiatives with signs of stabilizing comparable sales by the second half of 2018.
Target's comparable sales grew 1.3% in the fiscal second quarter but remained negative for four of the previous five quarters, the agency noted. Fitch projected EBITDA to decline 10% in 2017 to $6.6 billion and 7% in 2018 to about $6.1 billion.