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US credit downgrade cuts TVA bond rating
A major bond rating service has dropped its rating on nearly $20 billion of power bonds issued by the Tennessee Valley Authority due to the drop in the credit rating for the federal government as a whole.
Fitch Ratings Service, which last week downgraded the U.S. government’s credit rating, lowered its ratings on a number of identities that enjoy either the direct or implied backing of the U.S. government for their debt.
TVA, which is a federally owned corporation and America’s largest public utility, this week was downgraded a notch from AAA to AA-plus with a stable outlook. TVA’s debt is not formally government guaranteed, but ratings analysts base their rating in part on the expectation that the utility would likely receive federal support in the event of fiscal distress.
The downgrade was not driven by any TVA credit event, and the utility has no immediate plans to issue major bond issues, TVA spokesperson Scott Fiedler said. As a government-owned utility with the implied backing of Uncle Sam, TVA enjoys a lower cost of borrowing than do comparable investor-owned utilities.
“We do not expect any material impact,” Fiedler said in an emailed statement.
But in the future as TVA issues new debt, the lower rating could require the utility to pay a slightly higher interest rate than it would otherwise have under the previous AAA rating.
Simon & Schuster sold for $1.6 billion to KKR
Paramount said Monday it had reached a deal to sell Simon & Schuster, one of the biggest and most prestigious publishing houses in the United States, to the private equity firm KKR in a major changing of the guard in the books business.
The deal, for $1.62 billion, will put control of the cultural touchstone behind authors including Stephen King and Bob Woodward in the hands of a financial buyer with an expanding presence in the publishing industry.
Although private equity investors have had a significant footprint in the book business — different firms have owned literary agencies, publishing houses and retailer Barnes & Noble — the acquisition of one of the largest publishers in the nation vastly increases the hold of financial interests in the business.
Richard Sarnoff, who leads KKR’s media, entertainment and technology group, is a familiar name to many in the publishing industry, and his involvement is encouraging, several publishing executives said Monday. Sarnoff has held multiple positions at Bertelsmann, the company that owns Penguin Random House. Also involved is Ted Oberwager, who is on the board of RBMedia, an audiobook company, and Skydance Media, which teamed up with Paramount Pictures on “Top Gun: Maverick,” a Tom Cruise action drama that generated more than $1 billion.
Since Simon & Schuster was first put up for sale in 2020, many in the publishing industry have fretted over where the company might land.
A sale to another publisher would mean the new management would understand the book business. But it would also mean further consolidation in the industry, with potentially fewer players available to bid on big books and the chance of layoffs as redundant jobs were eliminated. It could also raise regulatory scrutiny. Paramount’s first attempt to sell Simon & Schuster, to Penguin Random House in 2020, was derailed by government antitrust concerns.
Aramco earns $30 billion in 2nd quarter, down 40%
Aramco has made $30 billion in profit in the second quarter, a nearly 40% decline from the same period the previous year.
The Saudi state-run oil giant attributed the decline to lower crude oil prices. The company said Monday that total sales were about $106 billion, down from $150 billion in the second quarter of 2022. Aramco is one of the biggest companies in the world, and Saudi Arabia is looking to oil revenues to fund ambitious plans to overhaul its economy.
The company reported a profit of more than $160 billion in 2022, the largest ever recorded by a publicly traded firm.
Wall Street up Monday after last week’s decline
Stocks closed higher as Wall Street regained momentum after its big rally for the year took a pause last week.
The S&P 500 rose 0.9% Monday to recover more than a third of its loss from last week. That was its first losing week in the last four.
The Dow added 407 points, or 1.2%, and the Nasdaq rose 0.6% Monday. Berkshire Hathaway rose after the company run by Warren Buffett reported stronger results than analysts expected.
Besides profit reports from media giants like The Walt Disney Co. and Fox, this week will also offer some highly anticipated reports on inflation.
Beyond Meat sales drop 30% in quarter
Plant-based meat maker Beyond Meat said its revenue plunged 30.5% in the second quarter as consumer demand for its burgers, sausages and other products fell despite price cuts.
The El Segundo, California-based company lowered its full-year revenue forecast as a result. Beyond Meat now expects revenue between $360 million and $380 million for the year. That’s down from the $375 million to $415 million it forecast at the end of the first quarter.
Beyond Meat’s shares fell 8% in after-hours trading Monday.
For the April-June period, Beyond Meat reported revenue of $102.1 million. That was lower than the $108.7 million Wall Street forecast, according to analysts polled by FactSet.
— Compiled by Dave Flessner
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