Fitch rates Costco notes AA-

Fitch Ratings said it assigned an AA- rating to Costco Wholesale Corp.'s $2 billion offering of new five- and 10-year notes and affirmed the company's issuer default rating, bank credit facility and senior unsecured notes at AA-, convertible subordinated notes at A+ and commercial paper at F1+.

The outlook is stable.

Proceeds from Costco's $2 billion debt issuance will be used to refinance $300 million of debt maturing in March, for share repurchases over time and for general corporate purposes.

The agency said the ratings on Costco reflect its well defined and executed operating strategy, stable operating performance and strong credit metrics and liquidity.

The ratings also consider Costco's increased leverage, the competitive operating environment and possible pressure from energy, labor and product cost increases, Fitch said. The new debt issuance will increase the debt-to-operating EBITDAR ratio to about 1.5x from 0.7x for the 12 months ended Nov. 26.

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