Fitch: No Rating Implications from Target's Credit Card Portfolio Sale

  Fitch: No Rating Implications from Target's Credit Card Portfolio Sale

Business Wire

CHICAGO -- October 23, 2012

Fitch Ratings does not expect any rating implications from Target
Corporation's announced sale of its credit card portfolio to TD Bank Group.
Fitch rates Target's long-term Issuer Default Rating (IDR) 'A-', and its
short-term IDR at 'F2'. The Rating Outlook is Stable. A full rating list is
shown below.

Target will sell the portfolio for the gross value of the outstanding
receivables at the time of the sale. The portfolio currently has a gross value
of $5.9 billion. Under a seven-year agreement, TD Bank will underwrite, fund
and own future Target credit card receivables, and Target will service the
receivables.

Following the sale of its credit card receivables, which is expected to close
in the first half of 2013, Target will lose the income from its credit
business ($560 million of EBIT in the latest 12 months [LTM] ended July 28,
2012), though it will benefit from a profit sharing arrangement. Target plans
to use approximately 90% of the net proceeds from the sale to reduce debt
levels, and the balance for share repurchases.

Fitch expects that consolidated adjusted debt/EBITDAR will improve to around
2.0x after the sale of the credit card receivables is completed and the
planned debt repayment is completed. Financial leverage (excluding the credit
business) is expected to track at around 2.0x in 2012-2014, before potentially
improving to below 2.0x in 2014, when most of the Canadian stores will have
been open for a full year.

Going forward, the required investments for the company's expansion in Canada
and ongoing share repurchases are expected to be largely financed with
operating cash flow. Target has indicated that it expects to repurchase $1.5
billion of shares in 2012, compared with net share repurchases of $1.9 billion
in 2011.

Fitch rates Target as follows:

Target Corporation

--Long-term IDR 'A-';

--Senior unsecured debt 'A-';

--Bank credit facility 'A-';

--Short-term IDR 'F2';

--Commercial paper 'F2'.

The Rating Outlook is Stable.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--Corporate Rating Methodology, Aug. 8, 2012;

--Short-Term Ratings Criteria for Non-Financial Corporates, Aug. 9, 2012

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Short-Term Ratings Criteria for Non-Financial Corporates

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685553

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Contact:

Fitch Ratings
Primary Analyst
Philip M. Zahn, CFA
Senior Director
+1-312-606-2336
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Monica Aggarwal, CFA
Senior Director
+1-212-908-0282
or
Committee Chairperson
David E. Peterson
Senior Director
+1-312-368-3177
or
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com