S&P assigns Covanta BB-, convertibles B

Standard & Poor's said it assigned a BB- corporate credit rating to Covanta Holding Corp. and a B issue rating to the company's $325 million in senior unsecured convertible bonds.

At the same time, S&P said it also raised the corporate credit rating on subsidiary Covanta Energy Corp., to BB- from B+ and assigned a BB- issue rating, with a 2 recovery rating to its proposed $1.3 billion credit facilities, consisting of a $680 million, first-lien secured term loan, $320 million in funded LOCs and $300 million in revolving credit facilities.

The outlook remains stable.

The rating on Covanta Holding reflects a highly leveraged financial profile with a current total debt to capital ratio of 77%, a projected consolidated funds from operations to total debt ratio of 19% and FFO to mandatory debt service ratio of about 1.8x for 2007, the agency said.

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