Moody's Investors Service on Thursday raised its ratings on Advance Auto Parts Inc. one level to investment grade, citing the auto parts retailer's operating performance and progress improving its credit risk profile.
The ratings firm upgraded Advance Auto Parts' senior unsecured rating to "Baa3," its lowest investment grade rating, from "Ba1," its highest non-investment or junk status rating. It also withdrew its "Ba1" corporate family and probability of default ratings, and its "SGL-2" speculative grade liquidity rating.
Moody's rating outlook is stable.
Moody's said Advance Auto Parts has shown solid operating performance, resulting in a credit profile consistent with an investment-grade retailer.
"Advance has demonstrated consistency in operating performance and this has resulted in a very solid credit profile," said Charlie O'Shea, Moody's senior analyst. "We expect operating performance to remain at a high level going forward, and would also expect financial policy to remain moderately conservative."
O'Shea said the rating also reflects his expectation that Advance Auto Parts will refinance its revolving credit facility well in advance of October 2011, when it is due to expire.
Moody's expects the market for retail auto parts will continue to be favorable as more people keep their cars longer and sales of new cars slow.
Advance Auto Parts is based in Roanoke, Va.
In August, it reported its fiscal second-quarter earnings rose 25 percent, helped by the addition of new stores over the past year. It also raised its outlook for the year, citing a strong first-half performance.
Shares slipped 34 cents to $58.45 in aftermarket trading after rising 34 cents to $58.79 during the regular session.
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