Nordstrom signs off on new debt deal on road to recovery
Seattle-based department store retailer Nordstrom Inc. sold $675 million in unsecured bonds on Wednesday, as it seeks to repay the debt it took on following the arrival of Covid-19 in the United States.
When the coronavirus crisis struck last year, Nordstrom resorted to taking on high-cost debt and mortgaging prized assets as it scrambled to bring in cash. This led to one of the company’s credit ratings falling into junk and left the retailer facing a looming cash crisis.
The company lost its investment-grade rating from S&P Global Ratings in September, a situation that was further compounded by a negative outlook from Moody’s Investors Services.
According to a report from Yahoo Finance citing people with knowledge of the matter, Nordstrom’s damaged ratings led to the imposition of borrowing restrictions, which has pushed the company to focus on refinancing debt and loosening credit terms.
On the markets, Wednesday’s debt deal has been seen as an important development in Nordstrom’s efforts to rebuild its reputation and ultimately reclaim is status as a blue-chip company.
The move frees up real estate that served as collateral, including Nordstrom’s Seattle flagship, and gives the retailer more time in which to repay its dept. It also helps the department store chain improve its liquidity.
Following the transaction, S&P has upgraded its outlook on Nordstrom from negative to stable and currently rates the company BB+, just short of investment-grade.
According to a statement from a Nordstrom representative quoted by Yahoo, the company “remains committed to an investment grade credit rating as part of our long term capital allocation priorities.”
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