Boston, MA 11/11/2013 (wallstreetpr) – Rite Aid Corporation (NYSE:RAD) has reported that its credit default swaps (CDS) spreads are at their tightest level since 2004 in this week as the company announced a profit in the third quarter and has grown its guidance for the next financial quarterly profit and lifted its 2014 guidance.
The protection of five years for the company went down to 245bp on Thursday before it went back a bit upwards to 257bp on Friday. Its spreads at the beginning of the year were 700bp.
Though the company is highly leveraged, it has completed a series of re financings in this year that has seen its interest expense reduced by USD85m and maturity ladder gone up to 2018.
After the first series of re financings by the company in February this year, its ratings were upgraded by Moody from Caa1. In a statement issued yesterday, Barclays said that it expected the ratings of the company to go up further as the company was continuously re financing and improving its performance. Apart from getting lower interest loan it has replaced some of its secured loans with term loans.
In February this year the company refinanced via tender USD410m of 9.75% senior secured 2016s, 10.375% senior secured notes due 2016 and USD180.3m of 6.875% senior secured due 2013s with money from the new term loans.
In July this year, the company finished a tender offer for its 9.5% senior secured 2017s using the money it got from USD810m of 6.75% senior unsecured 2021s that the company issued in the previous month. In June it had also made a tender offer for its 7.5% senior secured 2017s using the money it got from a new USD500m second term loan, and offered USD400m of new senior unsecured 2021s. The company’s CDS was benefitted from its excellent financial performance when it earned a profit for 4 quarters in a row.
