S&P downgrades Enron, says bankruptcy likely

Standard & Poor's downgraded Enron Corp. again and said it sees a bankruptcy filing as "likely." Affected ratings include the senior unsecured debt, cut to CC from B-, the subordinated debt, cut to C from CCC, its preferred stock, cut to C from CCC-, and its trust preferred stock, cut to C from CCC-. It also downgraded Enron's units, among them Azurix Corp., including its senior unsecured debt to CC from CCC+; Northern Natural Gas Co., including its senior unsecured debt cut to CC from B-; Marlin Water Trust II, Osprey Inc. and Osprey Trust, all of which saw their senior secured debt cut to C from CCC+; Enron Capital LLC and Enron Capital Resource LP's preferred stock, cut to C from CCC-

The CreditWatch was changed to developing from negative.

S&P said its action reflects its expectation that after following the breakdown of the merger with Dynegy Inc., Enron's "burdensome debt restructuring requirements, negligible liquidity, and limited access to capital will likely cause Enron to seek bankruptcy protection."

S&P puts Providian Financial on negative watch

Standard & Poor's put the ratings of Providian Financial Corp. on CreditWatch with negative implications.

Ratings affected include its senior unsecured medium-term note program at BB-, its subordinated medium-term note program at B and its convertible subordinated notes and zero-coupon convertible notes at BB-.

S&P also downgraded Providian Capital I's capital securities to CCC- from CCC+ and put them on CreditWatch with negative implications.

The rating agency also put Providian National Bank's bank notes rated BB+ on negative watch.

S&P rates Carlton convertibles BBB

Standard & Poor's assigned a BBB rating to Carlton Communications PLC's new €638.6 million of callable convertible bonds due Jan. 1, 2007.

S&P cuts Thermo Electron outlook to stable from positive

Standard & Poor's reduced its outlook on Thermo Electron Corp. and related entities to stable from positive and affirmed its ratings on the companies. Ratings affected include Thermo Electron's senior unsecured debt at BBB+ and its subordinated debt at BBB; Thermo Instrument Systems Inc.'s senior unsecured debt at BBB+ and subordinated debt at BBB; and the BBB subordinated debt of Thermo Ecotek Corp., Thermo Fibertek Inc., Thermo TerraTech Inc., Thermolase Corp., Thermotrex Corp. and Thermedics Inc.

S&P said the revision is based on "decreased profitability and the likelihood that a weak economic climate and challenging end market conditions, particularly in its Optical Technologies business, will continue to pressure profitability and operating performance in the intermediate term."

The rating agency commented: "Ratings are based on Thermo Electron's solid position in the instrumentation market, diversity gained from serving a variety of end markets, and moderate financial profile. Thermo Electron is nearing the end of a major reorganization that narrows the company's profile on its core businesses, which comprise the bulk of its earnings. Adequate operating performance in its life sciences, measurement, and control sciences business, which comprise 90% of sales, offset weaker prospects associated with its Optical Technologies business. Although the businesses are somewhat cyclical, they enjoy good operating margins and favorable growth prospects."

S&P puts Cummins on negative watch

Standard & Poor's put the long-term ratings of Cummins Inc. on CreditWatch with negative implications. Ratings affected include the BBB senior unsecured debt and the BB+ trust preferreds

S&P said the action reflects the expectation that Cummins' operating performance will "remain subpar for the near to intermediate term due to continued soft demand in the company's end markets. Cummins' weak operating results are occurring during a period of elevated debt levels and could delay expected improvement in the company's financial profile that is incorporated in the existing ratings."

S&P said it will meet with management to review the company's financial results and "to discuss the likely time frame for achieving operating improvements. If it appears that operating improvements and debt reduction will be substantially delayed, the ratings could be lowered."

Any downgrade is not expected to be to below BBB-, S&P said.

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