Pearson downgraded with stable outlook by Moody's

In an afterhours note to clients, the ratings agency said it had downgraded Pearson’s long-term issuer rating to Baa2 from Baa1. The agency has also affirmed the guaranteed short-term rating of Pearson Holdings Inc. at Prime-2.

The outlook on all ratings is stable, Moody’s added.

Gunjan Dixit, a Moody's vice president and lead analyst for Pearson, said, “Despite its strong liquidity, Pearson faces strong cyclical and policy-related headwinds in its key education markets that will continue to undermine operating performance,"

"The move to Baa2 recognises the significant operating challenges Pearson faces as well as the expected weakening of the company's financial metrics in 2016. It also considers the risk of a delay in the profitability recovery that Pearson anticipates for 2017-18, if its restructuring programme encounters execution risks or planned business growth is slow to materialise."