Interpublic Group (IPG) Placed on CreditWatch Negative by S&P

Standard & Poor's Ratings Services today placed its ratings, including its 'BB+' corporate credit rating, on U.S.-based ad agency holding company Interpublic Group of Cos. Inc. (IPG) (NYSE: IPG) on CreditWatch with positive implications.

The CreditWatch placement reflects IPG's better-than-expected organic revenue growth of 4.8% for fourth-quarter 2014 and 5.5% for full-year 2014. IPG also experienced margin expansion of roughly 200 basis points to 17.8% in 2014 due to restructuring and related costs taken in 2013 but were still up solidly excluding any one-time items. Excluding one-time items, margins could remain above 17.5% in 2015, absent a reversal in recent operating trends. We could upgrade the company if it achieves and maintains adjusted EBITDA margin above 17.5% (the midpoint of the 15%-20% range that we consider average for the industry) and adjusted net leverage in the low-2x area. We make adjustments to both EBITDA and debt consisting of pensions, other postemployment benefits (OPEBs), and capitalized operating leases.

"We plan to resolve the CreditWatch placement in March following discussions with management regarding the company's prospects for organic revenue growth and confirmation regarding its financial policy, as well as a detailed review of the company's most recent 10k report," said Standard & Poor's credit analyst Chris Valentine.

• New York-based ad agency holding company Interpublic Group of Cos. Inc.'s fourth-quarter and full-year 2014 organic revenue growth are higher than we had expected, resulting in greater-than-expected margin expansion.
• We are placing our ratings, including the 'BB+' corporate credit rating, on the company on CreditWatch with positive implications.
• We expect to meet with the company's management to discuss its 2015 earnings prospects and financial policy and to resolve the CreditWatch placement in March.

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