Fitch Ratings has downgraded WPP Group’s debt rating to BBB from BBB+. The outlook was changed to stable from negative.
The downgrade reflects the uncertain operating environment for the industry, which combined with the company’s plans for continued share repurchase and acquisitions is expected to limit the ability of the company to improve its credit profile materially over the intermediate term, Fitch said in a statement.
Fitch assigned the ad agency a stable outlook because WPP retains a strong liquidity profile, with its first debt maturities in 2004. The company assured its market position with strong net new business wins in 2002 that have carried into 2003. Fitch said it also expects WPP to benefit from year-to-year reductions in its operating cost structure.
Fitch expects WPP to produce organic growth in line with the market level or better during the year.
Earlier this month, Moody’s Investors Service said it was considering cutting WPP’s long-term debt ratings because of deteriorating operating results and an increase in debt levels, according to news reports.
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