Moody's gives Nielsen an upgrade


The recent IPO by the parent holding company of The Nielsen Company has led to an upgrade of the firm’s credit ratings by Moody’s Investors Service. The bond ratings remain below investment grade, but have moved up in their ratings.

Moody’s announced that it had upgraded Nielsen Company’s senior unsecured bond ratings to B2 (from Caa1) and Nielsen Finance LLC’s (Nielsen Finance) bank facility ratings to Ba2 (from Ba3) and its unsecured bond ratings to B2 (from Caa1). The outlook for all ratings was set at stable.

“The upgrade acknowledges the boost to Nielsen’s deleveraging process from the company’s successful IPO. Net proceeds from the issue of common equity in the IPO of $1.8 billion (after the exercise of the underwriters’ option to purchase additional shares) will be used to repay debt,” said Moody’s London office, which handled the review since Nielsen remains a Dutch company, although its main office is in New York and its new stock is listed on the NYSE.

With the IPO, Moody’s moved its primary corporate family rating (CFR) and probability of default rating (PDR) from The Nielsen Company to the new parent, Nielsen Holdings. Rather than the CFR and PDR of B2 previously assigned to The Nielsen Company, Moody’s moved up two notches to assign CFR and PDR ratings of Ba3 to Nielsen Holdings – that’s just three notches below investment grade.

“Nielsen’s Ba3 CFR also continues to reflect Moody’s view that the company enjoys strong international business positions with high barriers to entry. It addition, it is based on Moody’s expectation that the company can build on its track record to deliver continued revenue growth and can thus leverage its cost base, optimized over the last few years, to produce steady profit growth. Finally, Moody’s expects that Nielsen will utilize free cash flow generation to reduce debt further. However, the ratings also reflect the company’s still substantial leverage, the competitive and price challenges for Nielsen’s ‘Buy’ division as well as exposure, particularly in the ‘Watch’ division to a fast moving technological environment,” Moody’s stated.

The Watch division includes Nielsen’s lucrative US television ratings business. Buy is its consumer-focused research.

RBR-TVBR observation: The Moody’s ratings system is mysterious, with all of the capital letters, lower-case letters and numbers in various combinations. The important thing to note is that all of Nielsen’s ratings moves were in the right direction. Also, the main corporate rating is not far from moving out of junk bond territory – just a couple of steps to go.