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Global Credit Research - 16 Jun 2011
New York, June 16, 2011 -- In a comment published earlier today (available at http://www.moodys.com/research/Moodys-comments-on-7-Eleven-Issuer-Comment?docid=CMT_0000583732)
Moody's Investors Service stated that the placement on review for
possible downgrade of the Aa3 rating of Seven & i Holdings Co.,
Ltd. ("Seven & i"), the parent of Seven-Eleven
Japan Co., Ltd. ("SEJ"), which guarantees
the Prime-1 rated commercial paper program of 7-Eleven,
Inc. ("7-Eleven") would have no immediate impact
on either the Baa3 or Prime 1 ratings or the positive outlook.
"As indicated in the press release (available at http://www.moodys.com/research/Moodys-reviews-5-Japanese-Aa3-corporates-for-possible-downgrade?docid=PR_219916),
the review for downgrade of Seven & i is a result of the placement
of the sovereign rating of Japan on review for possible downgrade,"
stated Moody's Senior Analyst Charlie O'Shea. "Moody's
recognizes that while 7-Eleven benefits tangibly from its relationship
with its parent (SEJ) and ultimate parent (Seven & i), this
relationship is not the primary driver of 7-Eleven's Baa3
fundamental rating. The Prime-1 rating, however,
is the direct result of the unconditional guaranty from SEJ, and
as a result depends greatly on the rating of ultimate parent Seven &
i," added O'Shea.
The Baa3 senior unsecured rating reflects 7-Eleven's solid
credit metrics at the March 2011 LTM, with debt/EBITDA of around
2.7 times and EBITA/interest of about 3.5 times, significant
economies of scale available due its size, its well-recognized
brand name and concept, and its product line, which is heavily
weighted towards consumables, which generate steady revenues and
store traffic. Key credit concerns include the company's
sales concentration in the high-volume, low-margin
categories of gasoline and tobacco, and the significant capital
investment necessary to maintain an appealing store base. The Prime-1
commercial paper rating reflects the unconditional guaranty of the entire
program by Seven-Eleven Japan Co., Ltd.,
which is 100% owned by Seven & I Holdings Co. Ltd,
which is rated Aa3/on review for possible downgrade.
The principal methodologies used in rating 7-Eleven, Inc.
was Moody's Global Retail Industry Methodology published in December 2006.
Other methodologies and factors that may have been considered in the process
of rating this issuer can also be found on Moody's website.
Headquartered in Dallas, Texas, 7-Eleven, Inc.
("7-Eleven") operates about 6,800 convenience
stores in the United States and Canada, and licenses about 21,000
convenience stores globally, and Seven-Eleven Japan operates
over 13,000 convenience stores in Japan. 7-Eleven
is wholly-owned by Seven & i Holdings Co., Ltd.
(Seven & i) through its subsidiary Seven-Eleven Japan Co.,
Ltd ("SEJ"). Annual revenues are approximately $16.7
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
Kendra M. Smith
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
Moody's Investors Service
Moody's says 7-Eleven unaffected by ultimate parent review
250 Greenwich Street
New York, NY 10007
No Related Data.
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