What: The retailer ends with the repaying debt it took on at the height of the pandemic last year.

Why is it important: Nordstrom’s debt sale is an important step on its long road back to full blue-chip status in the debt markets.

The retailer sold USD 675 million of unsecured bonds this week to finish repaying the debt it took on at the panicked height of the pandemic last year. The buyback frees up prized real estate including its Seattle flagship that served as collateral. It buys the company more time to repay its debt and helps improve its challenged liquidity position.

Refinancing debt or loosening credit terms had become a particular focus of members of the Nordstrom family after deteriorating ratings last year. A cut to junk by just one of the three main rating firms can trigger a dramatic change of fate for companies. Nordstrom lost its investment-grade rating from S&P Global Ratings in September and earlier negative outlooks from Moody’s Investors Service. This week’s deal alone wasn’t enough to land Nordstrom an S&P investment-grade rank or a Moody’s outlook adjustment, but S&P revised its outlook on the company to stable from negative.

In all, the deal will save Nordstrom around USD 29 million annually in interest costs, which over the life of the bonds more than covers the USD 80 million penalty Nordstrom faces to repay the old notes early.

Nordstrom Starts Repairing Its Tarnished Status With Debt Deal