Moody's confirms Western Resources

Moody's Investors Service confirmed the ratings of Western Resources, Inc. and assigned a negative outlook, concluding a review begun on June 1, 2001. Ratings affected include its senior secured bonds at Ba1, senior unsecured bonds at Ba2 and preferred stock at B1.

Moody's said it put Western Resources on review, direction uncertain following the cancellation of its proposed merger with Public Service Co. of New Mexico and in response to regulatory uncertainty.

Moody's said its ratings anticipate Western Resources will be successful in refinancing its near term debt maturities, including $100 million of first mortgage bonds due in August 2002 and a $550 million term loan due in March 2003.

Western Resources' "ratings and outlook depend, to a large extent, on the successful execution of substantial refinancing," Moody's commented. It noted the company also needs to refinance $399 million of unsecured senior notes due in August 2003 and to extend its $500 million revolver which is due in March 2003 and expected to be downsized. Additional near term debt maturities include $135 million of KGE first mortgage bonds due in December 2003. Furthermore, in Moody's opinion, it is questionable whether Protection One will be able to repay the revolver extended by Western Industries, Inc., or refinance it when due in January 2003.

Moody's rates Titan's loan Ba3, negative outlook

Moody's Investors Service assigned a rating of Ba3 to Titan Corp.'s new $450 million secured credit facility, which consists of a $100 million revolver and a $350 million term loan B. In addition, Moody's confirmed ratings of B2 on its $250 million 5.75% convertible preferred securities due in 2030 issued by Titan Capital Trust, its Ba3 senior implied rating and its B1 senior unsecured issuer rating. The rating outlook was changed to negative from stable.

The new credit facility is secured by a perfected first priority lien on total assets and proceeds will be used to refinance existing indebtedness and support other general corporate purposes.

Negative factors affecting the ratings include, concern over Cayenta, e-business Solutions, negative EBIT performance, weak EBITA return on assets of less than 10%, goodwill of about $651 million exceeding equities of about $613 million at Dec. 31, 2001, high financial leverage, deficit free cash flow and the likeliness that the company will rely on external borrowings to finance working capital requirements and capital expenditures, according to Moody's.

Positive factors affecting the ratings include, the strength of the company's core business, Titan Systems, the strategic shift away from commercial businesses, a leading position in niche markets, solid pro-forma backlog at $3 billion and high percentage win rates, Moody's said.

"The negative ratings outlook reflects the softening of key credit statistics which may be exacerbated by integration risks associated with the recent acquisitions of GlobalNet, Inc., Jaycor, Inc., and Science and Engineering Associates," the rating agency said. "Moreover, the outlook incorporates the likely continuation of an acquisitive growth strategy. Further tightening of credit matrices could result in a ratings downgrade."

At Dec. 31, 2001, pro-forma debt was about $637 million to EBITA of about $90 million at 7.0 times and EBITDA less capital expenditures coverage of pro-forma interest expense was approximately 2.4 times

Moody's put Alfa Laval on upgrade review

Moody's Investors Service put Alfa Laval International AB and its subsidiaries on review for possible upgrade, affecting €1 billion of debt including its senior secured credit facilities at Ba2 and €220 million 12.125% senior notes due 2010 at B1.

Moody's said the review follows Alfa Laval's announcement it has formally begun an initial public offering.

Moody's added that its review will focus principally on the use of IPO proceeds and the resulting capital structure of the company as well as changes to the company's cash flow profile as a result of expected debt reductions. These reductions include the 35% equity clawback clause on the 12.125% notes.

Moody's rates Tyumen Oil notes Ba3

Moody's Investors Service assigned a Ba3 rating to the proposed loan participation notes to be issued by Salomon Brothers AG to finance its loan to JSC Tyumen Oil Co. The rating is based solely on the creditworthiness of Tyumen Oil Co.'s guarantor, TNK International Ltd., the holding company of the TNK group. The outlook is stable.

Moody's said its rating reflects the maturity of the upstream reserves of the TNK group, the need for it to undertake substantial investment to rehabilitate Samotlor oil field, work over others and develop new reserves to raise overall hydrocarbon production, low refinery utilization and the need to upgrade TNK's product slate, the company's growth plans and its potential future modest acquisitiveness.

Also affecting the ratings are the evolving and unpredictable Russian business, fiscal and legal environment, the company's short and unstable operating history and the need to repatriate a large proportion of foreign currency earnings.

Positives include TNK's very substantial reserves and production which rank it respectively #3 and #4 in Russia, its recent record of increasing production which is expected to accelerate over the medium term, its comparatively low (albeit rising) cost base following the 1998 rouble devaluation and other internal cost-cutting measures, the company's solid anticipated debt protection measurements, its considerable crude and refined product exports, and its efforts to put in place a more transparent and simplified corporate structure and governance, Moody's said.

Moody's confirms IFCI

Moody's Investors Service confirmed the Ba2 foreign currency issuer rating of IFCI, which is at the ceiling for such debt in India.

Moody's said IFCI had been on review for downgrade following a delay in payment of local currency obligations, which could have led to difficulties in the servicing of IFCI's foreign currency obligations.

Moody's also said that despite the recent recapitalization of IFCI by INR10 billion (US$214 million) from the government and other government-owned entities, the institution still faces severe liquidity problems and, in effect, difficulties in repaying principal amounts on its local currency bonds, the rating agency said.

The institution's liquidity crunch is a result of its poor asset quality and generally weak financial position, Moody's commented.

Nonetheless, Moody's said it believes government support will be made available to the institution when needed to meet its foreign currency obligations if needed.

Fitch rates Tyumen notes B+

Fitch Ratings assigned a B+ rating to the fixed rate loan participation notes due 2007 issued by OAO Tyumen Oil Co. and guaranteed by TNK International Ltd., the holding company. The outlook is stable.

Fitch said the ratings of TNK are largely influenced by the high level of existing secured bank debt, and the high quality of the income stream - largely hard currency export receipts - used to secure this debt.

S&P puts Focus Retail on positive watch

Standard & Poor's put Focus Retail Group plc on CreditWatch with positive implications.

Ratings affected include Focus Retail's £45 million 13% notes due 2010 and £125 million 11% bonds due 2010, both rated B.

S&P downgrades Anker Coal

Standard & Poor's downgraded Anker Coal Group Inc. and changed the CreditWatch to negative from developing.

Ratings affected include Anker's $55 million revolving credit agreement, cut to CCC+ from B- and its $125 million 14.25% second priority notes series B due 2007, cut to CCC- from CCC.

S&P rates TuranAlem notes B+

Standard & Poor's assigned a B+ rating to TuranAlem Finance BV's new notes due 2005 guaranteed by Bank TuranAlem.

Moody's upgrades Downey Financial

Moody's Investors Service upgraded Downey Financial Corp., affecting $120 million of securities including Downey Financial Capital Trust I's trust preferreds, raised to B1 from B2. The outlook remains positive.

Moody's said the upgrade and continued positive outlook are based on Downey's good credit risk profile, increasing core deposit base and improving efficiency.

The rating agency put Downey's on positive outlook in November 2000 but said a higher rating was unlikely until further seasoning could demonstrate the underlying credit quality of the company's subprime mortgage portfolio.

"As Downey's subprime loans have experienced further seasoning, we believe that the underlying asset quality of this portfolio is above average, and has been further strengthened as a result of tighter underwriting and collections standards," Moody's said.

Downey has also demonstrated conservative risk management by reducing its construction loan book in anticipation of the current economic environment, the rating agency added.

S&P rates Tesoro loan BB+, notes B+

Standard & Poor's assigned a BB+ rating to Tesoro Petroleum Corp.'s new $250 million senior secured term bank loan due 2006 and a B+ rating to its $450 million senior subordinated notes due 2012.

S&P rates Reader's Digest loan BB+

Standard & Poor's assigned a BB+ rating to Reader's Digest Association Inc.'s new $192.5 million revolving credit facility due 2006, $250 million tranche A term loan due 2007 and $700 million tranche B term loan due 2008.

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