Warner Music Group $3 Billion Debt Upgraded To B1, With 'High Default Risk'
June 27, 2016 at 12:38 PM (PT)
WARNER MUSIC GROUP's over $3 billion in debt, incurred by LEN BLAVATNIK's ACCESS INDUSTRIES when he acquired the company in 2011, has been upgraded by MOODY'S from B2 to B1, with a "high default risk."
MOODY'S INVESTOR SERVICE describes WMG as a "highly speculative" investment with a risk of defaulting on its loand "high," though its financial outlook has been dubbed "stable."
MOODY'S believes that WMG profits could grow "as a result of lower costs associated with online music subscription and advertising-supported streaming revenue which is now its largest and fastest-growing revenue source, underpenetrated markets worldwide for paid music streaming consumption and rising demand for WMG's music content."
According to HYPEBOT, most of WMG's $3.05 billion in debt is being carried at an average interest rate of 6.5% and comes due in the next four to six years. But $100 million of the debt, which come due in three years carries a whopping 13.75% interest rate.
The prime business borrowing rate currently sits at near record lows of 2.70%, with many companies able to borrow at prime +1 or 3.70%