LONDON May 4 The cost of insuring debt of Ahold
ALHN.AS fell on Friday after credit agency Standard & Poor's
reinstated its investment-grade corporate credit rating thanks
to the sale of the retailer's U.S. Foodservice unit.
Ahold said late on Wednesday it had sold its U.S. unit for
$7.1 billion, more than had been expected, which propelled its
shares to four-year highs.
After tightening by about six basis points on Thursday,
five-year credit default swaps on Ahold fell a further five
basis points on Friday to 55 basis points, a trader said, after
the S&P upgrade to BBB- from BB+ with a stable outlook.
That boosted S&P's credit rating on Ahold to investment
grade from "junk" status, although its unsecured bonds remain in
speculative-grade, rising to BB+ from BB.
"The disposal of Foodservice will have a limited impact on
the group's business risk profile, but Ahold's commitment to
dedicating 2 billion euros to debt reduction will substantially
strengthen the financial risk profile," said S&P credit analyst
However, S&P said the possibility of further upgrades for
Ahold was "very remote" and would require, among other things,
an improvement in profitability of its U.S. businesses.
Analysts had expected the U.S. divestment would move Ahold's
corporate rating back to investment grade soon.
Fitch Ratings upgraded Ahold to BB+ from BB on Thursday,
still one notch below investment grade. Fitch gave Ahold's
rating a positive outlook saying sales of other non-core
businesses were needed to improve its ratings further.