In Record Year For Shaky Debt, McClatchy Among 3 Biggest Junk Bond Issuers

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By: Mark Fitzgerald

In one of the worst periods for credit downgrades since Moody’s Ratings Services began issuing speculative grade level (SGL) ratings in 2002, The McClatchy Co. is among the three biggest debtors across all businesses whose bonds are deemed deepest in junk territory, the ratings firm said Tuesday.

The number of companies with Moody’s lowest SGL rating of SGL-4 in May — 47 — matched the number in the previous peak month of March 2008, which was the highest since the introduction of the liquidity rating in October 2002.

Among all the companies it rates as SGL-4, Moody’s said the top three by loan volume in May were Abitibi Consolidated Inc., Six Flags, and McClatchy .

The June E&P cover story on the debt levels of newspaper companies reported McClatchy’s long-term debt at $2.39 billion, most of it a hangover from borrowing for its blockbuster acquisition of Knight Ridder.

This is Moody’s definition of its lowest speculative grade level: “Issuers rated SGL-4 possess weak liquidity. They rely on external sources of financing and the availability of that financing is, in Moody’s opinion, highly uncertain.”

McClatchy (NYSE: MNI) ended trading Tuesday up 4 cents, or 0.53%, at $7.54 a share.

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