DBRS Downgrades Thomson Reuters to BBB (high), R-2 (high), Pdf-3 (high), Stable Trends

DBRS has today downgraded Thomson Reuters Corporation’s (Thomson Reuters or the Company) Issuer Rating, Unsecured Debentures and Unsecured Medium-Term Notes ratings to BBB (high) from A (low), Commercial Paper rating to R-2 (high) from R-1 (low) and Preferred Shares rating to Pfd-3 (high) from Pfd-2 (low). The trends are all Stable. This action follows the Company’s change in financial management guidelines. As part of a broader plan to improve its business mix and cost structure while returning value to shareholders, the Company now intends to target a net debt-to-EBITDA ratio of up to 2.5 times (x) from 2.0x prior.

On April 19, 2013, DBRS confirmed the Company’s ratings at A (low), R-1 (low) and Pfd-2 (low) with Stable trends. The ratings confirmation recognized progress made to overcome recent challenges and reflected further positive expectations regarding the Company’s enhanced product offerings, particularly in the Financial & Risk segment. The confirmation was also supported by the Company’s stable free cash flow generation over the past year. DBRS stated that the Company’s credit metrics would have to remain relatively stable (i.e., gross debt-to-EBITDA at or below 2.0x) for the Company’s ratings to remain commensurate with their current rating categories.

The downgrade reflects DBRS’s view that the Company’s target net debt-to-EBITDA ratio of up to 2.5x results in a credit risk profile that is no longer consistent with the A (low) rating category. Going forward, DBRS will continue to monitor the progress of Thomson Reuters’ strategic initiatives related to product simplification, cost cutting, non-core asset dispositions and the effective rollout of the Company’s financial data provision platforms.

Thomson Reuters’ revised ratings with Stable trends reflect the Company’s entrenched market position, the diverse nature of its customer base and its predominantly subscription-based revenue model. The ratings also reflect the need for constant innovation, exposure to changing technology, intensifying competition in key segments and the risks associated with the Company’s acquisition and divestiture program.

Notes:
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union

The applicable methodology is Rating Companies in the Publishing Industry, which can be found on our website under Methodologies.