S&P Places Albertson's (ABS) on CreditWatch Positive Amid IPO Play

Standard & Poor's Ratings Services placed its ratings on Albertson's Holdings LLC and New Albertson's Inc. (NYSE: ABS) on CreditWatch positive.

"ACI is planning an IPO and has indicated plans for both debt reduction and refinancing. Our preliminary view is that we would rate ACI higher than our current ratings on Albertson's Holdings LLC and NAI," said credit analyst Robert Schulz. "The company has made recent progress in improving operations or gaining synergies at its various units, including NAI and Safeway."

We expect to resolve the CreditWatch and assign ratings to ACI in conjunction with the completion of the IPO and sufficient information on the new debt and refinancing. Our initial view is that we could rate ACI in the low-'BB' category based on the prospective capital structure and position as the third-largest food retailer behind Wal-Mart Stores Inc. and Kroger Co. We also based this view on the combined company's position in certain markets and improved ability to be more price competitive (a key dynamic in the food retail sector), while also improving operating margins over time at underperforming units.

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