PrefBlog

DBRS has announced it has:

placed the ratings of The Thomson Corporation (Thomson or the Company) – long-term debt rated A (low), Commercial Paper rated R-1 (low) and Preferred Shares rated Pfd-2 (low) – Under Review with Negative Implications following the Company’s announcement today that it has initiated discussions which are expected to lead to a transaction to acquire Reuters Group PLC (Reuters) in a cash and equity transaction (50%/50%) for roughly $19 billion ($14.09 or £7.05 per Reuters share).

…

DBRS expects to finalize the ratings of Thomson once its review has been completed, with the final rating expected to remain within the investment-grade range.

The Thomson 7-year bonds, mentioned in the previous post on this issue, have rebounded to +85bp after spiking to +110bp when the rumours started.

Thomson preferreds continue to be rated P-2 with a developing outlook by S&P.

Update : Moodys has joined in:

Moody’s Investors Service placed The Thomson Corporation’s (“Thomson”) A3 senior unsecured ratings on review for possible downgrade following the company’s announcement that it is in merger discussions with Reuters Group PLC (“Reuters”) for a combination of the two businesses for an approximate $19.4 billion purchase price, including assumed debt.

Note that Moodys does not explicitly rate the prefs, just the Senior Unsecured Regular Bond/Debenture (and associated shelf), which they currently rate A3 ((P) A3)

Update, 2007-09-14: Moody’s has downgrade the USD debt from A3 to Baa1

Update, 2007-11-15: DBRS has affirmed the preferreds at Pfd-2(low) because:

During the course of the review, Thomson announced that the proceeds from the sale of its Learning division would exceed previously expected levels by more than $1 billion and that these proceeds would be used to reduce the incremental debt taken on by the Company to complete the Reuters acquisition. DBRS now expects net debt-to-EBITDA to increase from just over 2.0 times in 2006 to approximately 2.5 times (pro forma 2007), a range that is within DBRS’s expectations for an A (low) rating.

This entry was posted on Tuesday, May 8th, 2007 at 10:46 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.