Fitch affirms Best Buy

Fitch Ratings said it affirmed Best Buy Co., Inc. at issuer default BB+, its bank credit facility at BBB+ and its convertible subordinated debentures at BBB.

Fitch also assigned a prospective rating of BBB+ to the issuer's proposed $2 billion five-year unsecured revolving credit facility.

The outlook is stable.

The affirmation follows Best Buy's announcement of a $5.5 billion share buyback and 30% dividend increase, which are expected to be neutral to the company's credit metrics. Debt is expected to stay around current levels over the intermediate term, Fitch said. For the past 12 months ended June 2, the adjusted debt-to-operating EBITDAR ratio was 2 times.

The rating reflects Best Buy's leading market position and customer-driven innovation, which have differentiated the company from its competitors and produced solid operating results, Fitch said.

The rating also considers the intense competition in the consumer electronics sector and changes in consumer spending and technology trends over time.

Fitch said it expects Best Buy will remain prudent in its financial management and that the remaining $2.5 billion of share buybacks will be funded with excess cash and future cash flow generation.

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