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Moody's downgrades TEGNA ratings

Moody's downgraded TEGNA Inc.'s corporate family rating to Ba3 from Ba2 and its probability of default rating to Ba2-PD from Ba1-PD.

The rating agency attributed the ratings on the expectations that TEGNA's leverage will be about 5.3x at year-end and decrease to about 4.5x in 2020 following the additional debt raised for the purchase of TV stations from Nexstar Media Group Inc. and acquisition of TV and radio stations from Dispatch Broadcast Group.

The ratings on the senior unsecured bank credit facility and existing senior unsecured notes were downgraded to Ba3 from Ba2. These ratings actions conclude the review for downgrade initiated June 11.

Additionally, the rating agency assigned a Ba3 rating to TEGNA's proposed $900 million senior unsecured notes due in 2029. TEGNA intends to use the net proceeds of these notes to repay about $320 million of its unsecured notes due October and to repay approximately $290 million of its unsecured notes due July 2020 and borrowings under its revolving credit agreement.

Moody's noted that TEGNA is "well positioned to capture advertising spend in its markets, allowing it to partially weather the overall decline in TV advertising budgets." Moody's believes the company is likely to engage in more strategic acquisitions. However, due to an increase in leverage, material M&A is unlikely in the next 12 months.

The outlook on the company was changed to stable from rating under review.