Gannett ratings reworked by Moody’s

Moody’s Investors Service as lowered its credit ratings on Gannett Company’s guaranteed senior unsecured note and credit facility ratings to Ba1 from Baa3. In this case, though, the downgrade is more like a housekeeping move than any negative event.

The downgrades came because of the maturity of Gannett’s $307 million of senior unguaranteed notes on April 1^st.  “As a result of the maturity, Gannett no longer has unguaranteed debt in its capital structure. The previously outstanding unguaranteed notes were structurally junior to the guaranteed debt and would have provided first loss absorption in the event of a default,” Moody’s explained.

“Moody’s believes Gannett funded the maturity with existing cash and revolver borrowings. Moody’s views a reduction in debt as credit positive, but the amount is not meaningful enough to warrant an upgrade to the Ba1 Corporate Family Rating (CFR). Because all of Gannett’s funded debt is now guaranteed, Moody’s believes it is appropriate to reposition the guaranteed debt rating to a level that is line with the Ba1 CFR in accordance with Moody’s loss given default notching methodology and the revised debt mix. Moody’s affirmed Gannett’s Ba1 CFR and stable rating outlook as the guaranteed debt rating adjustment is not the result of a change in Moody’s view of Gannett’s overall credit profile. Moody’s updated the loss given default assessments to reflect the revised debt structure,” the ratings agency said.

Approximately $2.4 billion of debt instruments are affected.

Downgrades:

..Issuer: Gannett Co., Inc.

….Senior Unsecured Guaranteed Bank Credit Facilities due September 2014, Downgraded to Ba1, LGD3 – 40% from Baa3, LGD3 – 38%

….Senior Unsecured Guaranteed Regular Bond/Debenture, Downgraded to Ba1, LGD3 – 40% from Baa3, LGD3 – 38%

Moody’s maintains the following other ratings on Gannett:

..Issuer: Gannett Co., Inc.

…. Corporate Family Rating, Ba1

…. Probability of Default Rating, Ba1

…..Issuer Rating, Ba2

…..Senior Unsecured unguaranteed shelf, (P) Ba2

…..Speculative Grade Liquidity rating, SGL-2

…..Rating Outlook, Stable