Fitch: WPP still on watch

Fitch Ratings said it is maintaining WPP Group plc's BBB+ long-term issuer default and senior unsecured ratings on Rating Watch negative.

This follows WPP's offer for Taylor Nelson Sofres plc for €1.1 billion in cash and shares.

WPP has been disciplined in its approach to Taylor Nelson, not raising the offer made in July, but the downside risk has grown in the wider economic environment since the offer was made, Alex Griffiths, a senior director at Fitch, noted in a written statement.

"A long and deep recession, and associated advertising downturn, could see WPP's credit metrics stretched above what is appropriate for a BBB+ rating for an unacceptable period of time. This significantly increases the chances of negative action when the Rating Watch is resolved," Griffiths said.

When the issuer was placed on watch in July, Fitch said it expected leverage to peak at about 2x before de-leveraging toward the historical norm closer to 1.5x.

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