Cost Of Credit Protection For Macy's Debt At Highest In 3 Years: Fitch

The cost of protecting debt issued by department store chain Macy's Inc. against potential default has climbed to its highest level in three years, as warmer-than-usual autumn weather keeps shoppers away from stores and discourages the purchase of winter goods, Fitch Solutions said Wednesday. Five-year credit default swaps written on Macy's bonds have widened by 16% in the last week, and are now 140% wider than they were at the start of the year, said Fitch. After trading above the BBB+ level (lowest level of investment grade) for the past year, the CDS are now trading in speculative, or junk bond territory, said Fitch. "In addition to the unseasonably warm weather slowing down winter clothing sales, souring market sentiment for Macy's is likely coming from weaker foot traffic at department stores," Fitch Director Diana Allmendinger said in a statement. Macy's earlier reported third-quarter earnings that fell short on sales, and lowered its earnings outlook for the rest of the year. Shares were down 14% in early trade, and are down 40% in the year so far, while the S&P 500 has gained about 1.2%.