January 9, 2013 / 4:41 PM / in 5 years

TEXT-S&P rates HD Supply's notes 'CCC+'

Jan 9 - Standard & Poor's Ratings Services today assigned its 'CCC+'
unsecured debt rating to HD Supply Inc.'s proposed offering of $650 million
senior subordinated notes due 2021. The recovery rating on the notes is '6',
indicating our expectation of negligible (0% to 10%) recovery in the event of a
payment default. The 'B' corporate credit rating and stable outlook on
Atlanta-based HD Supply are unaffected. We expect the industrial distribution
company to use proceeds to pay down balances outstanding on its existing
subordinated debt due 2015. By reducing balances on its existing subordinated
debt, HD Supply will no longer be subject to springing maturity on other debt
issues. Pro forma for the proposed transaction, we expect credit measures to
remain unchanged.

The ratings on privately owned HD Supply reflect the company's "satisfactory" 
business risk profile as a major industrial distributor of infrastructure and 
energy, maintenance, repair and improvement, and specialty construction 
products. The rating also reflects the company's "highly leveraged" financial 
risk profile and the impact on its operating performance arising from the 
protracted weakness in U.S. construction activity. However, the company's 
business-line diversity, leading market positions, and operational scale to 
weather the construction downturn partly offset these factors. Although 
Standard & Poor's remains cautious about the potential recovery in the 
construction cycle, HD Supply continues to expand its share of sales in the 
maintenance, repair, and operations and infrastructure markets and reduce the 
effect of the weak construction markets on its near- to intermediate-term 
operating performance. Its capital structure has about $6 billion of funded 

     -- HD Supply Inc., Oct. 17, 2012 
     -- Business Risk/Financial Risk Matrix Expanded, Sept. 18, 2012 
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 


HD Supply Inc.
 Corporate Credit Rating                   B/Stable/--

New Ratings

HD Supply Inc.
 $650 mil sub. notes due 2021              CCC+
  Recovery Rating                          6

Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 

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