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Moody's cuts Thomson, Reuters
Moody's Investors Service said it downgraded Thomson Corp.'s senior unsecured rating to Baa1 from A3, concluding the review for downgrade initiated on May 8.
The agency downgraded Thomson's senior unsecured regular bond/debenture to Baa1 from A3. Moody's also downgraded to Baa1 from A3 Reuters Group plc's senior unsecured regular bond/debenture and senior unsecured medium-term note program and Reuters Finance plc's senior unsecured regular bond/debenture and senior unsecured medium-term note program.
The outlook is stable.
According to Moody's, the downgrade reflects the significant increase in Thomson's leverage that will result from the pending Reuters Group plc acquisition, with pro forma 2007 debt-to-EBITDA ratio at 3.1 times.
Moody's said the company's increase in leverage comes as its overall business profile becomes more cyclical due to the sale of the Thomson Learning assets and the acquisition of Reuters.
Thomson's Baa1 rating is supported by good margins and cash flow generated from leading market positions in providing information solutions to business and professional customers, the agency said.
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