Fitch Raises Gap Credit to Investment Grade
Gap Inc. saw its credit rating raised to investment grade by Fitch Ratings. Bond investors are betting Moody’s Investors Service and Standard & Poor’s will soon do the same.
Gap bonds have gained as the San Francisco-based company, which owns the Old Navy and Banana Republic chains, reduced debt and improved profitability since February 2002, when it was cut to “junk” grade.
Lower debt and rising sales have helped Gap’s 8.8% notes due in 2008 strengthen more against U.S. Treasury securities than debt with similar ratings.
Shares of Gap fell 4 cents to $20.85 on the New York Stock Exchange.
Fitch boosted Gap’s senior unsecured notes to BBB-minus from BB-plus. Gap is rated BB-plus at S&P;, and Ba1 at Moody’s, both one level below investment grade.
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