Moody's may cut New York Times into junk territory
NEW YORK Oct 23 (Reuters) - Moody's Investors Service said on Thursday it may cut its ratings on New York Times Co (NYT.N) into junk territory, citing concerns about continuing revenue declines and risks associated with refinancing its debt.
The New York Times posted a quarterly loss from continuing operations on Thursday and said advertising revenue at its news media group dropped 16 percent for the quarter. For details, see [ID:nN23398087]
Newspaper advertising market conditions are likely to remain challenging in 2009 and continuing revenue declines will make it difficult for the company to bring its credit metrics in line with its investment grade rating, Moody's said in a statement.
It will also make it hard for the publisher to execute its plans to improve liquidity, Moody's added.
Moody's said it may cut the New York Times from "Baa3," the lowest investment grade. Downgrades into junk territory can significantly increase a company's borrowing costs.
Risks from refinancing maturing debt also prompted the review for downgrade, Moody's said.
The New York Times said it is looking for ways to reduce its debt, but said it is a difficult time to make asset sales.
The cost to insure the company's debt with credit default swaps rose to 477.50 basis points on Thursday, or $477,500 per year for five years to insure $10 million in debt, from 460 basis points on Wednesday, according to Markit Intraday. (Reporting by Karen Brettell; Editing by Dan Grebler)