Moody's Keeps Gannett Credit Rating at Investment Grade, But Warns of Downgrade Possibility

By: Mark Fitzgerald Moody's Investors Service on Friday confirmed its investment-grade credit rating of Gannett Co. Inc., but kept a negative outlook on its debt, signaling a possible downgrade at some undetermined point.

While another major credit rating agency, Standard & Poor's Ratings Services, earlier this year downgraded Gannett to a "junk" credit rating, Moody's rating of Ba1 keeps it above the speculative grade, which begins at B.

Carrying a junk bond rating can make borrowing more expensive for a company, and can keep it from accessing some sources of funding. Numerous chains, including The New York Times Co., have lost their investment-grade credit rating in the past year.

The report from Moody's senior analyst John Puchalla included a relatively upbeat assessment of Gannett's financial performance, saying it was generating meaningful free cash flow, was keeping debt comfortably with the requirements of its loan agreements, and has the diversity of assets to weather the continuing newspaper industry slump.

For more details and analysis of the Moody's rating action, check out E&P's business-oriented Fitz & Jen blog.
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Clarification: This story has been changed from an earlier version to clarify that a negative outlook does not set a timetable for a possible ratings downgrade.