S&P analysts based their downgrade partly on the unlikelihood that Penney’s “operating performance will materially improve before it faces sizeable upcoming debt maturities.” Penney has already taken prompt and assertive action to quelch bankruptcy rumors, saying the company is not working with advisors on a filing.
That leaves some sort of deal with lenders, such as a debt-for-equity swap, as the more likely scenario. The department store retailer doesn’t have any very large maturities due in the near term, and analysts by and large see Penney as having enough liquidity to cover its obligations for the time being.
