S&P cuts Eco-Bat

Standard & Poor's downgraded Eco-Bat Technologies plc including cuttings its €165 million 10.125% bonds due 2013 to B from B+. The outlook is stable.

S&P said the downgrade follows a sharp deterioration in the company's financial performance.

The deterioration in Eco-Bat's financial performance is due to the combination of a low lead pricing environment; the weakening of the U.S. dollar against the euro and, to a lesser extent, the British pound sterling; and lower like-for-like sales volumes, S&P said.

Eco-Bat's financial performance has been affected by these negative factors more than was previously anticipated. For the six months to June 30, 2003, the group had funds from operations (FFO) of negative £1.8 million compared with positive £7.8 million in the equivalent period in 2002.

The change in FFO is due to a significant (relative to the company's small size) acquisition in the U.S. Not only have the additional businesses not generated enough additional FFO as expected, but the debt burden of the company is now larger than it was in 2002. As a result, FFO to annualized debt dropped to negative 2.6% in the year to June 30, 2003, from 16.5% in the same period 2002, S&P said.

Moody's cuts Bauang Private Power

Moody's Investors Service downgraded Bauang Private Power Corp.'s senior secured notes to B1 from Ba3. The outlook is negative.

Moody's said the downgrade reflects its concern over the uncertainty of the company's contract re-negotiations with PSALM and the political risk evident in the Philippine's power sector.

The B1 rating reflects Moody's expectation that the current contract re-negotiations on nominated capacity and buy-out price, although not yet complete, are unlikely to exert a material impact on Bauang's debt-servicing ability.

However, Moody's said it is concerned about the lack of transparency regarding the overall process. In particular, no assurances exist that the government would not return in the future to again re-negotiate the contract for more concessions.

Moody's believes that Bauang is particularly vulnerable to contract re-negotiation risk with its status as a peak-load plant and a low dispatch level.

On the other hand, the B1 rating reflects Bauang's continued satisfactory operating and financial performance and the current payments from National Power Corp.

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