Moody’s downgrades nearly $3 billion in GCI debt

Moody’s Investor’s Service downgraded $2.9 billion of Gannett’s debt today to a “Baa2” rating from “A3.” “It is still above junk bond level, but Baa2 indicates that bondholders should consider it ‘lower medium grade’ debt,” Reuters says in this story.

“Moody’s expects that Gannett’s ongoing efforts to reduce costs and debt will not fully offset what is likely to be a deeper revenue decline in 2009 than in 2008,” analyst John Puchalla wrote, according to Reuters.

Lower debt ratings often increase borrowing costs — not something GCI needs right now. The Moody’s decision follows a similar move by rival Standard & Poor’s early last month. Reuters notes that ratings agencies have soured on the debts of several publishers, including the New York Times Co., as their ad revenue declines.

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