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Gannett Loses Investment-Grade Rating

Magazine article Editor & Publisher

Gannett Loses Investment-Grade Rating

Article excerpt

Gannett Co. Inc., the nation's largest newspaper publisher, lost its investment-grade credit rating from Moody's Investors Service Thursday.

Gannett had been one of the last publicly traded newspaper companies with an investment-grade rating. The Washington Post Co., with its diversified portfolio of properties including the profitable Kaplan education company, is the only remaining newspaper publisher whose bonds are not rated as "junk."

The rating downgrade will make borrowing more expensive for Gannett, and may shut it out altogether from certain sources of funding.

Moody's downgraded $1.6 billion of Gannett's senior unsecured notes -- that is, debt not secured by collateral but at the head of the line for repayment among unsecured obligations -- to Ba2 from Baa3. The old rating was Moody's barest-minimum investment-grade rating. The new rating is two notches below Moody's top-rated junk.

Moody's acknowledged that its rating downgrade could have the effect of triggering a so-called springing guarantee in Gannett's credit facilities that will require Gannett to guarantee the credit agreements within 15 days of a downgrade to speculative-grade. …

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