Moody’s puts CBS on review for downgrade

Moody's Investors Service said it placed CBS Corp.’s rating on review for downgrade after the company announced it entered a merger pact with Viacom Inc., in which CBS shareholders will own about a 61% stake in the combined company.

The transaction will be all-stock, but Moody’s is conducting the review because Viacom is lower rated and more-weakly positioned than CBS, the agency said.

“The legal structure of the combination and/or structural simplification or enhancement will be important in determining whether bondholders can reap the full benefits of the larger company. The companies are expected to combine into a single debt issuer, which would result in a clean transition for bondholders under a unified credit and ratings,” Moody’s said in a press release.

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