Moody's affirms Source Media, Accuity

Moody's Investors Service said that it affirmed the B1 corporate family rating of Source Media Inc. and the B1 corporate family rating of Accuity Inc., while changing the outlook to positive.

According to the agency, affirmed ratings include Source Media's $30 million senior secured revolving credit facility, due 2010 -- B1, LGD3, 35%, $89 million senior secured term loan B, due 2011 at B1, LGD3, 35% and corporate family rating at B1 as well as Accuity's $5 million senior secured revolving credit facility, due 2010 at B1, LGD3, 35%, $70 million senior secured term loan B, due 2011 at B1, LGD3, 35% and corporate family rating at B1.

Lowered ratings include Source Media's probability of default rating to B2 from B1 as well as Accuity's probability of default rating to B2 from B1, Moody's said, adding that the affirmation of the B1 corporate family ratings is supported by the companies' dependable free cash flow, relatively good liquidity profile, the predictable of revenues, the severability of their assets and the reputation of Source Media's flagship publications, including "American Banker" and "Bond Buyer", which attract loyal readership and steady circulation.

However, the ratings remain constrained by the companies' high financial leverage and tightening covenant headroom, the competition they face from other print and online rivals and their vulnerability to the banking and financial services sectors for a significant contribution to their business, the agency said.

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