PrefBlog

It’s not a preferred share issuer – but it’s a sign of the times:

DBRS has today downgraded the Issuer Rating of Torstar Corporation (Torstar or the Company) to BBB (low) from BBB. The trend is Stable and the rating is no longer Under Review with Negative Implications. The downgrade reflects DBRS’s view that Torstar’s earnings profile has been structurally affected by a consumer shift to digital forms of media as the Company has struggled to sustain organic revenues and profitability. The new rating also reflects DBRS’s view that weakening demand will continue to place pressure on the Company’s revenues, margins and cash flow generation going forward. DBRS’s concern is not based primarily on the Company’s debt level, as Torstar has remained prudent in terms of financial management, but rather the Company’s income and cash-generating prospects.

There’s an interesting conflict of trends in consumer borrowing:

Overall non-mortgage debt loads continued to increase during the third quarter, up 1.8 per cent from the same quarter of last year, the credit-monitoring firm [Equifax Canada] said in its latest Quarterly Credit Trends Report released Tuesday. However, only 1.22 per cent of debts were unpaid after 90 days or more in the July-September quarter.

That’s down sharply from 1.37 per cent in the previous quarter and the lowest delinquency rate on record going back to early 2007, before the recession began.

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums gaining 13bp, FixedResets off 1bp and DeemedRetractibles winning 15bp. Volatility was average. Volume was average.

This entry was posted on Wednesday, November 7th, 2012 at 1:30 am and is filed under Market Action. 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.