McGraw-Hill Cos., parent of the world’s largest ratings company, had its credit grade cut two steps by Moody’s Investors Service.
McGraw-Hill’s ranking was reduced to Baa2 from A3 with a negative outlook, Moody’s said Thursday in a statement. About $800 million of debt is affected, Moody’s said.
The Justice Department sued Standard & Poor’s and McGraw-Hill, both of New York, on Feb. 4, accusing the companies of deliberately misstating the risks of mortgage bonds to keep its share of ratings in the booming business of repackaging home loans for sale as securities.
The downgrade reflects the loss of earnings from McGraw- Hill’s planned $2.5 billion sale of its education unit as well as “heightened litigation risks in light of the recent civil lawsuits,” Moody’s analysts John Puchalla and John Diaz said in the statement.
Moody’s, based in New York, is the second-largest ratings company.
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