The
Morningstar DBRS understands that net proceeds drawn under the CP Program will be used for working capital and general corporate purposes including to support the anticipated financing of the Company's pending acquisition of
Based on its review, Morningstar DBRS is satisfied that the Company's revised CP Program limit and the credit facility continues to meet Morningstar DBRS' requirements with respect to commercial paper programs as outlined in 'Morningstar DBRS Global Corporate Criteria' and the Company's CP limit increase, does not affect Morningstar DBRS' assessment of the Company's credit profile.
KEY CREDIT RATING CONSIDERATIONS
Morningstar DBRS last confirmed Home Depot's credit ratings on
Since then, Home Depot has reported results for the first quarter of F2024 (period ended
CREDIT RATING DRIVERS
Morningstar DBRS may take a negative credit rating action if weaker-than-expected operating performance and/or more aggressive financial management policies result in credit metrics to weaken on a sustained basis (i.e., debt-to-EBITDA leverage above 2.5x). Conversely, and although highly unlikely given the economic climate and near-term increase in leverage, if Home Depot's earnings profile were to improve considerably and/or capital allocation were managed such that key credit metrics improve to levels considered strong for the current rating (i.e., debt-to-EBITDA structurally well below 2.0x), Morningstar DBRS may take a positive credit rating action.
CREDIT RATING RATIONALE
Home Depot's credit ratings are supported by its dominant market position, large scale, geographic diversification, and free cash-generating capacity. The credit ratings also reflect the intense competition and cyclicality of the home improvement retail industry as well as risks related to possible future growth strategies.
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental, Social, or Governance factors that had a relevant or significant effect on the credit analysis.
A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (
BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of
(B) Weighting of FRA Factors
In the analysis of
(C) Weighting of the BRA and the FRA
In the analysis of
Notes:
All figures are in
Morningstar DBRS applied the following principal methodology:
Global Methodology for Rating Companies in the Merchandising Industry (
https://dbrs.morningstar.com/research/431175/global-methodology-for-rating-companies-in-the-merchandising-industry
Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (
The following methodologies and criteria have also been applied:
Morningstar DBRS Global Corporate Criteria (
https://dbrs.morningstar.com/research/431186/morningstar-dbrs-global-corporate-criteria
Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://dbrs.morningstar.com/research/427030 (23 January 2024).
The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.
A description of how Morningstar DBRS analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/431153.
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.
The credit rating was initiated at the request of the rated entity.
The rated entity or its related entities did participate in the credit rating process for this credit rating action.
Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.
This is a solicited credit rating.
The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS trends and credit ratings are under regular surveillance.
Information regarding Morningstar DBRS credit ratings, including definitions, policies, and methodologies, is available on dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.
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