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Rating Action:

Moody's rates Interpublic's amended bank credit facility Ba2; PDR changed to Ba2

05 May 2010

Approximately $2.4 billion of rated debt affected

New York, May 05, 2010 -- Moody's Investors Service assigned a Ba2 rating to The Interpublic Group of Companies, Inc.'s ("IPG) amended $650 million senior unsecured revolving credit facility due July 18, 2013. The transaction enhances IPG's liquidity profile by extending the maturity date of the credit facility from July 2011 to July 2013 and increasing the revolver commitment size from $335 million to $650 million. IPG's Ba2 Corporate Family Rating (CFR) is unchanged, but its Probability of Default Rating has been changed to Ba2 from Ba1, based on a revision in our expected family recovery rate to 50% from 35%. LGD point estimates were updated based on the new capital structure. The rating outlook remains positive.

..Issuer: Interpublic Group of Companies, Inc. (The)

....Probability of Default Rating, Changed to Ba2 from Ba1

....Senior Unsecured Bank Credit Facility, Assigned Ba2, LGD4, 52%

....Senior Unsecured Conv./Exch. Bond/Debenture, Changed to Ba2, LGD4, 52% from Ba2, LGD4, 68%

....Senior Unsecured Regular Bond/Debenture, Changed to Ba2, LGD4, 52% from Ba2, LGD4, 68%

The credit facility is not guaranteed by IPG's subsidiaries and ranks pari passu with other senior unsecured indebtedness of the company. The amendment provides additional EBITDA cushion to facilitate covenant compliance and maintain continued access to the revolver. Moody's anticipates that IPG will not have difficulty remaining in compliance with the credit agreement financial covenants, which include a minimum interest coverage covenant, a maximum leverage covenant and a minimum consolidated LTM EBITDA requirement. The moderate increase in pricing will not have a material impact on the company's cash flows and credit metrics as we do not anticipate the company will be reliant on the revolver for liquidity as long as it sustains its large cash balance which we believe is likely for the near to intermediate-term.

IPG also announced the commencement of an offer to purchase for cash up to 370,000 shares of its outstanding 5.25% Series B Cumulative Convertible Perpetual Preferred Stock. IPG has approximately $525 million of preferred stock outstanding. Assuming IPG accepts the full 370,000 shares for which it is tendering and that it pays the maximum purchase price, the company will spend a maximum amount of $400 million to repurchase the stock (including accrued dividend payments). Moody's expects the tender offer will be funded with cash on hand, which stood at $1.9 billion at 3/31/2010. Notably, the transaction will have a positive impact on the company's debt to EBITDA leverage ratio if fully funded with cash, despite the fact that Moody's includes only 50% of this issue in credit ratio calculations. In Moody's opinion, the credit facility amendment and the preferred stock repurchase, demonstrate IPG's commitment to improving its financial flexibility by de-levering its balance sheet and maintaining a goal of regaining its investment grade status. Moody's notes that further deleveraging provides incremental support to our positive outlook and IPG's recently upgraded CFR.

The last rating action was on March 12, 2010, when Moody's upgraded IPG's CFR to Ba2.

IPG's ratings were assigned by evaluating factors we believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of IPG's core industry and IPG's ratings are believed to be comparable to those of other issuers of similar credit risk.

The Interpublic Group of Companies, Inc. with its headquarters in New York is among the world's largest advertising, marketing and corporate communications holding companies in the world. Revenues and EBITDA (incorporating Moody's standard adjustments) for 2009 were $6 billion and $932 million respectively.

New York
Neil Begley
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Alexandra S. Parker
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's rates Interpublic's amended bank credit facility Ba2; PDR changed to Ba2
No Related Data.
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