Morningstar DBRS Assigns Credit Rating of “A,” Stable Trend, to The Home Depot, Inc.’s New Debt Issuance

DBRS Limited (Morningstar DBRS) assigned a credit rating of “A” with a Stable trend to The Home Depot, Inc.’s (Home Depot or the Company) $10 billion Senior Unsecured Notes (the Notes) issuance, which closed on June 25, 2024. These Notes are issued in multiple tranches maturing between 2025–64, with interest rates varying from 4.75% to 5.40%. The credit rating being assigned is based upon the credit rating on already-outstanding series of the Company’s Senior Unsecured Debt.

The Notes are unsecured obligations that rank equally with Home Depot’s existing and future unsecured and unsubordinated indebtedness. The Company intends to use the net proceeds from the Notes to fund repayment of commercial paper, that were issued to finance the purchase price of the SRS Acquisition and related fees and expenses, and/or for general corporate purposes.

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 (January 23, 2024) at https://dbrs.morningstar.com/research/427030.

BUSINESS RISK ASSESSMENT (BRA) AND FINANCIAL RISK ASSESSMENT (FRA)
(A) Weighting of BRA Factors
In the analysis of Home Depot, the relative weighting of the BRA factors was approximately equal.

(B) Weighting of FRA Factors
In the analysis of Home Depot, the relative weighting of the FRA factors was approximately equal.

(C) Weighting of the BRA and the FRA
In the analysis of Home Depot, the BRA carries greater weight than the FRA.

Notes:
All figures are in U.S. dollars unless otherwise noted.

Morningstar DBRS applied the following principal methodology:
-- Global Methodology for Rating Companies in the Merchandising Industry (20 June 2024), https://dbrs.morningstar.com/research/434781

Morningstar DBRS credit ratings may use one or more sections of the Morningstar DBRS Global Corporate Criteria (April 15, 2024, https://dbrs.morningstar.com/research/431186), which covers, for example, topics such as holding companies and parent/subsidiary relationships, guarantees, recovery, and common adjustments to financial ratios.

The following methodologies and criteria have also been applied:
-- Morningstar DBRS Global Corporate Criteria (15 April 2024),
https://dbrs.morningstar.com/research/431186
-- Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024), https://dbrs.morningstar.com/research/427030

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 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 https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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