Report: Buyout could hurt Saks credit

New York -- A buyout of Saks could further downgrade the retailer’s already low credit rating. According to a report in the Wall Street Journal, credit rating provider S&P has placed Saks’ already non-investment-grade rating on watch for potential downgrade because any buyout would likely be leveraged with a large amount of debt. S&P currently gives Saks a credit rating of BB, the second-highest “junk bond” rating, which affects Saks’ loan interest rates.

Starwood Capital Group LLC, the investment firm headed by real estate developer Barry Sternlicht, and Canadian retail conglomerate Hudson’s Bay, which also owns the Lord & Taylor department store chain, have both reportedly bid around $2.5 billion to purchase Saks. An unidentified third bidder, reportedly a sovereign wealth fund from the Middle Eastern nation of Qatar, is also said to be in the running to buy Saks.

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