NEW YORK (Reuters) - Macy's Inc <M.N> said it has a new $1.5 billion credit agreement, and the department store operator lowered its 2011 interest expense forecast, saying it received more favorable terms on the new facility.

Macy's, which last month regained an investment grade rating from Standard & Poor's thanks in part to improving sales, said the new agreement matures on January 20, 2015, and replaces a $2 billion agreement that was to mature in August 2012.

Macy's now expects interest expense of $442 million this year, down from its earlier forecast of $450 million.

(Reporting by Phil Wahba; editing by John Wallace)