23rd Sep 2019 16:39
(Alliance News) - Moody's Investors Service on Monday assigned a Baa3 rating to the EUR600 million senior unsecured notes issued by ITV PLC and due 2026.
The broadcaster intends to use the note issue proceeds for partial repayment of its pre-existing EUR600 million senior secured noted due 2022 and EUR500 million senior unsecured noted due 2023, as well as to repay drawdowns under its GBP630 million revolving credit facility. As such, the new note issue will be leverage neutral.
The 2022 and 2023 notes have a Baa3 issuer rating and Baa3 instrument rating, which has not been altered.
Sebastien Cieniewski, Moody's lead analyst for ITV, said "ITV's liquidity profile will improve pro forma for the transaction as the company's maturity profile will be extended through the partial refinancing of the existing notes due 2022 and 2023 by the longer-dated new notes due 2026."
The ratings agency based its rating on ITV's "strong broadcasting franchise and well-established programming operations" within the UK, as well as its growing share of viewing across the last three years.
Diversification "through investments into the faster-growing ITV Studios and online segment" was also a ratings contributor, as was the firm's "fairly modest Moody's adjusted leverage ratio" on June 30 of 2.1 times.
Constraining ITV's rating is its significant exposure to UK advertising spend, which made up just under half of its revenue in the first half of 2019, and margin pressure, as well as competition from firms like Netflix Inc. ITV's limited free cash flow after dividends was also a constraining factor.
Moody's said ITV's outlook is Stable, explaining that: "The stable outlook reflects our expectation that the company's leverage will remain below 2.5 times on a sustained basis. The outlook also assumes that the company will continue to outperform the challenging UK TV advertising market in 2019."
Shares in ITV were down 1.3% at 126.65 pence in London on Monday afternoon.
Separately, ITV announced it has priced the tender offer for its 2022 and 2023 notes. Acceptances were received for EUR265.3 million of EUR600.0 million notes due 2022 , for which the purchase price is 105.208%. Therese have a reference benchmark of minus 0.437% and a purchase spread of 65 basis points, as well as a 0.213% purchase yield.
For the EUR500 million notes due 2023, acceptances totalled EUR241.1 million worth of notes and the purchase price is 106.144%. The reference benchmark is negative 0.429% and the purchase spread is 85 basis points. The purchase yield is 0.421%.
This will leave EUR334.7 million of the 2022 notes and EUR258.9 million of the 2023 notes remaining.
ITV will also pay an accrued interest payment on the notes purchased, with the settlement date expected to be Friday this week.
By Anna Farley; [email protected]
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