U.S. retail and consumer products companies have solid liquidity and are well positioned to meet their debt obligations through 2009, according to a Fitch Ratings report titled 'U.S. Retail and Consumer Products: Maintaining Solid Liquidity'. This is despite ongoing credit market volatility, as well as significant debt-financed M&A activity and leveraged recapitalizations that occurred in the industry over the last two years.

"Most of the companies reviewed have sufficient free cash flow generation and cash balances to meet both debt maturities and capital requirements," said Karen Ghaffari, Senior Director, Fitch Ratings. "When also considering external sources of liquidity, debt maturities are manageable over the next few years."

Fitch is cautious about how macroeconomic factors such as higher energy prices, housing market turmoil and employment levels will affect consumer spending levels. These factors are particularly important for the sector as the holiday season approaches. Fitch also notes that M&A and financial engineering have adversely affected the credit profiles of several companies. Fitch expects that future transactions could face challenges if current credit market uncertainties continue. Investors are also requiring higher returns and even step-up pricing in the event of credit deterioration.

For this report, Fitch analyzed the liquidity positions of 30 issuers rated 'BBB+' to 'B-' in the retail and consumer sectors. This report is part of a larger global liquidity review initiated by Fitch in May 2007 of its rated issuers across corporate finance as a number of liquidity-based sensitivities in the market continue to influence both issuer and investor decisions. The review's goal is to gain a better perspective on the magnitude of maturities that would be coming due over the next 24 months per each North American corporate sector, and what organic and contingent sources were available to meet these obligations during this period of the credit cycle.