S&P’s Lowers IPG’s Long Term Credit To Junk Status

NEW YORK Standard & Poor’s on Friday downgraded Interpublic Group’s long-term credit rating to “junk” status, citing “organic revenue declines, insufficient control over agencies’ variable cost structures and considerably lower margins.”

Previously rated “BBB-“–the lowest rung of investment grade–IPG’s rating slid a single step to “BB+.” S&P’s also lowered IPG’s short-term credit rating, to “B” from “A-3.” At the same time, the ratings remain on “credit watch” with negative implications, as they have since Aug. 6.

“The downgrade is based on Interpublic’s recent record of weak profitability and higher debt to EBITDA, and the likelihood that restoring earnings prospects and a financial profile commensurate with prior ratings could take longer than anticipated,” said S&P’s analyst Alyse Michaelson, in a statement.

The action came the day after IPG reported revenue declines for both the fourth quarter and all of 2002. Also on Friday, in unusually high trading volume of 9.4 million, IPG’s stock plummeted to $7.20 before rebounding slightly to close at $8.45, down 1.6 percent from the close of the market on Thursday.