Gannett Investment-Grade Credit Rating Pulled by S&P, Too

By: Mark Fitzgerald Standard & Poor's Ratings Services Monday pulled its investment-grade credit rating for Gannett Co., the second ratings agency to assign "junk bond" ratings to the nation's biggest newspaper publisher.

Last week, Moody's Investors Services also assigned junk ratings to Gannett debt, which will have the effect of increasing the chain's borrowing costs and barring it from some sources of financing.

S&P rated Gannett's overall corporate rating as BB, a downgrade from the bare-minimum investment-grade BBB-. The new designation rates Gannett debt as "speculative."

S&P also downgraded Gannett's senior unsecured notes, whose holders would be expected to be at the front of the line for repayment. But S&P's new rating of B+, from BBB-, indicates "highly speculative" bonds. And the rating agency's recovery rating of 6 suggests investors can expect to be repaid from zero to just 10% of their investment in the event of a default.

Details of the S&P rating actions are at E&P's business-oriented Fitz & Jen blog.