S&P lowers more US Airways ratings

Standard & Poor's lowered further US Airways Inc. ratings, including its $83.2 million 10.3% equipment trust certificates series 1988 A-D due 2010, $20.8 million equipment trust certificates series 1987 A due 2011, $20.8 million series 1987 B due 2011, $20.8 million equipment trust certificates series 1987C due 2011, $20.8 million equipment trust certificates series 1987D due 2011, $20.8 million equipment trust certificates series 1987E due 2011 and $20.8 million equipment trust certificates series 1987F due 2011 to D from CCC-, its $123.8 million 6.76% Class A enhanced equipment trust certificates series 1996 due 2009 to BB+ from A-, its $43.7 million 7.5% Class B enhanced equipment trust certificates series 1996 due 2009 to BB- from BBB-, its $57.2 million 8.93% Class C enhanced equipment trust certificates series 1996 due 2009 to CCC from B+ and Piedmont Aviation Inc.'s $62.4 million 10.3% equipment trust certificates series ABC due 2010 to D from CCC-.

S&P said the action follows deferral of payments on those certificates due July 15. Although there is a grace period, S&P does not expect payments will be made in that time.

In addition, ratings were lowered on the 1996 enhanced equipment trust certificates, as they are secured by aircraft that US Airways is replacing, over time, with newer models, S&P said.

It is not clear whether the company would cure payment defaults if it receives final approval for its loan guaranty and draws on the $1 billion facility, S&P said.

It noted bondholders can pursue legal remedies against the company for nonpayment that could force it into bankruptcy, endangering the financial turnaround plan. However, that outcome would result also in the repossession of planes, many of which now have depressed values that may not fully cover outstanding principal and interest on the defaulted equipment trust certificates.

S&P says Delta unchanged

Standard & Poor's said Delta Air Lines Inc.'s net loss of $186 million for the second quarter of 2002 does not affect the company's credit rating or outlook. S&P assesses Delta's corporate credit at BB with a negative outlook.

Delta's pretax loss margin of 8.3% was better than that reported by AMR Corp. and than those expected from UAL Corp. and US Airways Group Inc., but worse than those reported by Continental Airlines Inc. and Northwest Airlines Corp., continuing the pattern of recent quarters, S&P noted.

The domestic market, particularly for business travel, continues to be the main revenue problem, with Delta's European (benefiting from its SkyTeam alliance with Air France) and Latin American operations performing relatively better, S&P said.

Management expects continued revenue weakness through at least the end of 2002, and is seeking to contain costs and capital expenditures ($780 million expected in the second half of the year) in response.

Delta's liquidity and balance sheet remain one of the best among large U.S. airlines, with $1.8 billion of cash, $1 billion of credit lines, and $5.5 billion of unencumbered aircraft (of which only $2 billion, however, are newer planes that are most desirable as collateral), S&P said.

Moody's rates Bank Mandiri notes B3

Moody's Investors Service assigned a B3 rating to Bank Mandiri's proposed $150 million subordinated notes due 2012. The outlook is positive.

Moody's said the rating reflects its opinion that the bank's importance in the banking system and its close government ties will accord it strong government support for all of its debt obligations.

In addition, the rating also incorporates the bank's weak but improving financial fundamentals, Moody's said.

Although the proposed notes are structurally subordinated to senior obligations, Moody's said it believes it is not appropriate to give the notes a lower rating given the bank's significant franchise, ample liquidity, strong government support and the currently low foreign currency bond ceiling for Indonesia.

S&P upgrades Bank Negara Indonesia

Standard & Poor's upgraded Bank Negara Indonesia (Persero) Tbk (PT), raising its $145 million senior notes due 2007 to B- from CCC.

Moody's lowers Caiua outlook

Moody's Investors Service lowered its outlook on Caiua Serviços De Eletricidade SA (CAIUÁ) to negative from stable, affecting its euro medium-term notes at B1.

Moody's said the action follows a similar revision to Brazil's B1 foreign-currency rating for bonds and notes.

Moody's upgrades Resource America senior implied

Moody's Investors Service upgraded Resource America, Inc.'s senior implied rating to B2 from B3 and confirmed its senior unsecured rating at Caa1, affecting $138 million of securities. The outlook is stable.

Moody's said Resource America has made progress in executing a prudent growth strategy and has demonstrated an increased degree of focus in its real estate and energy businesses.

In addition, the company has delivered steady earnings while maintaining acceptable leverage levels, Moody's said.

Modoy's added that the subordinated position of the rated notes, which are at the holding company, remains essentially unchanged. They do not benefit from any subsidiary guarantee and the existence of secured debt at operating subsidiaries continues to be constraining.

Resource America's core businesses carry inherent risk reflective in the rating, Moody's said. Its real estate business manages troubled, often subordinated commercial real estate financings. Also, related party transactions exist within the real estate business.

Resource America's growing energy operations, which now comprise approximately 80% of its revenue base, require constant reinvestment of cash flow to replace produced reserves and are vulnerable to commodity pricing and legislative impacts.

Moody's cuts Superior TeleCom

Moody's Investors Service downgraded Superior TeleCom Inc. including cutting its $169 million senior secured revolving credit facilities due 2004, $300 million senior secured term loan A due 2004 and $403 million senior secured term loan B due 2005 to Caa2 from B2 and its convertible trust preferred stock to C from Caa1. The outlook remains negative. Superior Telecom's $200 million senior subordinated notes are not rated.

Moody's said it lowered Superior because of the company's constrained liquidity position and heightened concerns over its ability to meet its debt obligations.

The lower rating also reflects continued deteriorating industry fundamentals and an uncertain outlook for the foreseeable future, Moody's said.

Over the past two years, the difficult environment in Superior's end-markets, particularly the telecommunications industry, has resulted in sharply reduced demand for the company's wire and cable products, Moody's noted. This, coupled with its highly leveraged capital structure, has led to significant deterioration in the company's operating performance and credit protection measures.

The company generated EBITDA of about $130 million for the 12 months ending March 2002 and EBITDA of $20 million for the first quarter of 2002, Moody's said.

S&P cuts Midland Cogeneration

Standard & Poor's downgraded Midland Cogeneration Venture LP including cutting Midland Funding Corp. II's $367 million subordinated secured lease obligation bonds to BB- from BB+ and Midland County Economic Development Corp.'s $200 million tax-exempt subordinated secured lease obligation bonds to BB- from BB+. The outlook was revised to negative from developing. It confirmed Midland Funding Corp. I's $300 million senior secured lease obligation bonds at BBB-. The outlook was revised to stable from developing.

S&P said the action follows the recent actions on CMS Energy Corp.'s subsidiary Consumers Energy. Consumers is Midland Cogeneration Venture major offtaker and represents 94% of contract revenues for the project.

Midland Cogeneration Venture's bonds are rated on a stand-alone basis and although the project continues to operate well on a technical basis, because Consumers represents Midland Cogeneration Venture's largest source of operating cash flow, Midland Cogeneration Venture's ratings depend on Consumers' credit quality.

S&P said Midland Cogeneration Venture's subordinated secured bonds one notch above Consumers senior unsecured rating given the level of cash collateral that is held for the benefit of the bondholders.

S&P rates Swift & Co.'s loan BB; notes B+

Standard & Poor's rates Swift & Co.'s proposed $550 million senior secured credit facilities at BB, $400 million senior unsecured notes due 2009 at B+ and corporate credit rating at BB. The outlook is stable.

The credit facilities will consist of a $350 million revolver due 2007 and a $200 million term loan B due in 2008. Security is the stock of all borrowers and all stock and assets of borrowers and their wholly-owned domestic subsidiaries. Proceeds from the term B and the notes will be used to help fund the $1.2 billion acquisition of ConAgra Foods Inc.'s meat processing business.

Ratings reflect relatively high debt levels offset by the company's number 3 position in both the U.S. beef and pork processing industries, a diverse customer base and high barriers to entry, S&P said.

Pro forma for the acquisition, lease adjusted total debt to EBIDTA will be about 2.9 times and EBIDTA coverage of interest expense is expected at around 3.0 times.

Moody's cuts Metris

Moody's Investors Service downgrades Metris Cos. Inc. and put the ratings on review for further possible downgrade. Ratings affected include Metris' senior debt, cut to B1 from Ba3. Metris' bank subsidiary Direct Merchants Credit Card Bank, NA (deposits at Ba1) was put under review for downgrade.

Moody's said the action follows Metris' report that it lost $36 million in the quarter ended June 30.

Moody's said the unexpected loss raises concerns about the company's strategic direction and future profitability.

The risk to creditors of Metris has increased, Moody's said based on the unexpected second quarter loss as well as the impact of the company's recent regulatory agreement, which had already reduced the financial flexibility at the parent by requiring Metris to support additional capital at Direct Merchants.

The review for possible further downgrade is because of concerns about the company's future profitability, Moody's said.

Moody's confirms Seehafen Rostock

Moody's Investors Service confirmed Seehafen Rostock Umschlagsgesellschaft mbH including its €50 million senior notes at B3, concluding a review for downgrade begun in April 2002. The outlook is stable.

Moody's said the action follows Seehafen Rostock's receipt of consents from sufficient holders of its €50 million 9.875% notes due 2009 to enable it to remove existing financial covenants.

The change substantially eliminates the prospect of an acceleration of the notes and a payment default occurring in the short term, Moody's said. As a result Seehafen Rostock's financial position is stabilized in the near term.

However Moody's said Seehafen Rostock faces a number of significant challenges. It is weakly positioned in the B3 rating category and any substantial material negative impact arising from any of these challenges, as detailed below, may result in downwards pressure on the ratings.

Moody's raises PS Business Parks outlook

Moody's Investors Service raised its outlook on of PS Business Parks, Inc. to positive from stable and confirmed its Ba2 preferred stock rating, affecting $170 million of securities.

Moody's said it revised PS Business' outlook because of the REIT's demonstrated ability to generate strong operating performance in diverse economic environments, while successfully growing its property portfolio and maintaining a conservative capital structure.

Moody's said PS Business' leasing and property management efforts have enabled it to add value to both its existing and to its newly acquired properties, as evidenced in part by its high occupancies (at 94.3% as of mid-2002).

The REIT has lengthened its average lease tenor from three years in 1998 to six years today, and has continued to improve the credit quality of its tenant base, the rating agency added.

In addition, the REIT has maintained a strong financial profile through solid earnings growth and retention, and strong financial statistics.

In particular, the REIT's fixed charge coverage (including capitalized interest and principal amortization) was 3.6x as of the first quarter of 2002, with effective leverage at 40%, Moody's noted.

S&P says Northwest unchanged

Standard & Poor's said Northwest Airlines Corp. and unit Northwest Airlines Inc.'s rating and outlook are unchanged after the company reported a second-quarter net loss of $93 million, somewhat worse than the prior year, but relatively good, given the adverse industry environment. S&P rates Northwest's corporate credit at BB- with a negative outlook.

Northwest's negative 5.9% pretax margin was less unfavorable than those of most other large airlines that have reported thus far, S&P said.

Although Northwest has been hurt by the weak revenue environment, its domestic markets were less affected by the events of Sept. 11, 2001, and their aftermath than most others and have limited low-fare competition, S&P added. In addition, Northwest is more heavily concentrated on Pacific routes than any other U.S. airline, and those markets are recovering faster than average.

Management offered no specific guidance regarding expected third-quarter results, but stated it expects modest net profits in July and August (September is always seasonally weaker than the prior months), S&P continued.

Liquidity remains strong, with $2.7 billion of unrestricted cash (including a fully drawn $965 million bank facility), and all upcoming aircraft deliveries either financed or with financing commitments in place, S&P added.

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