PrefBlog

Dominion Bond Rating Service has announced that it:

has today placed Transcontinental Inc.’s (Transcontinental or the Company) Senior Unsecured Debt rating of BBB (high) and Preferred Share rating of Pfd-3 (high) Under Review with Negative Implications. Those ratings were previously on Negative trend. The Under Review action follows DBRS’ update of the methodology Rating the Printing Industry, which involved lowering the Industry Business Risk Rating (BRR). The BRR was reduced to the BB (high)/BB range from BB (high). (See separate PR released earlier today.)

The rationale for the methodology change was based on DBRS’ view that the highly competitive industry is being increasingly affected by the structural transition toward digital-based mediums and is applying pressure to traditional printing revenue.

In its review of Transcontinental, DBRS will focus on the Company’s potential to adapt to the changing environment and will assess the Company’s prospects going forward.

Transcontinental’s current rating reflects the Company’s sound financial profile and established position as the largest printer in Canada. The rating also considers the highly competitive and cyclical nature of the printing industry. The earnings profile of Transcontinental is being challenged as customers shift to digital forms of media and the Company struggles to sustain revenues and profitability. In terms of financial profile, Transcontinental remains reasonably sound despite pressure on operating cash flow and higher dividends due to the Company’s modest level of debt.

Transcontinental is the issuer of TCL.PR.D, currently rated Pfd-3(high) by DBRS and P-3(high) by S&P.

This entry was posted on Friday, July 20th, 2012 at 1:15 pm 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.