Fitch Ratings downgraded the long-term issuer default ratings of Sears Holdings Corp. and its units Sears Roebuck Acceptance Corp., or SRAC, and Kmart Corp. to RD, or restricted default, from C after it completed its previously announced exchange offers.

The Illinois-based department store operator closed exchange offers for its outstanding 8% senior unsecured notes due 2019 and outstanding 6.625% senior secured notes due 2018 for new notes due 2019.

Sears exchanged about $214 million of its senior subordinated notes and about $170 million of its senior secured notes. The company also exchanged $100 million of unsecured SRAC notes into like principal PIK notes due March 2028.

The rating agency considers the actions as a distressed debt exchange, taking into account the maturity date extension and the change in interest from cash-pay basis to PIK.

Subsequently, Fitch upgraded Sears' long-term issuer default rating to CC from RD.

The rating agency also assigned a CCC/RR2 rating to the extended portion of the second-lien secured notes, while downgrading the nonextended second-lien secured notes of Sears to C/RR6 from CC/RR3.

Sears' interest expense, CapEx and pension plan contributions are expected to total $800 million in 2017 and 2018, Fitch noted.