Moody's cuts Enron senior unsecured debt to Ca from B2

Moody's Investors Service on Monday downgraded Enron Corp.'s senior unsecured debt ratings to Ca from B2 and confirmed the not-prime rating of its commercial paper following the announcement that Enron Corp. and some subsidiaries filed Chapter 11 bankruptcy. The downgrade reflects the expectation that recovery rates on senior unsecured claims will be low, Moody's said.

At the same time, Moody's lowered Northern Natural Gas' ratings to B3 from B2and left them under review for further possible downgrade, although the Enron unit was not included in the bankruptcy filing. Moody's said it would monitor the pipeline's ability to meet its debt service obligations as well as the potential for it to be included in Enron's reorganization.

Fitch cuts Enron ratings to D on bankruptcy

Fitch on Monday lowered Enron Corp.'s senior unsecured, subordinated debt and preferred stock ratings to D and removed them from watch on the company's bankruptcy. Fitch also lowered its ratings of the senior secured notes of Marlin Water Trust II and the senior secured notes of Osprey Trust to D from CC. Fitch said its CC rating of pipeline subsidiaries Northern Natural Gas Co. and Transwestern Pipeline Co. are maintained as they were not included in the bankruptcy petition but remain on watch, negative.

Fitch expects recovery rates on senior unsecured claims in the 20% to 40% range, with subordinated and preferred stock recovery rates significantly less. Based on the complexity of Enron's financial and business structure, Fitch said it expects a protracted bankruptcy period, exacerbated by claims and litigation from many different creditor, customer, investor and employee interests. Fitch considers significant levels of recovery for unsecured debt holders as unlikely, with the D rating indicating a recovery level below 50%.

Moody's cuts Exide convertibles to C from Ca

Moody's Investors Service on Monday downgraded to C from Ca ExideTechnologies Inc.'s $398 million of 2.9% convertible senior subordinated notes due 2005 and cut its senior debt rating to Ca from Caa2, along with other downgrades for the company's debt. The outlook remains negative, Moody's said.

The action reflects Moody's amplified concerns regarding Exide's current liquidity crisis and the escalating probability that Exide will default on its bond interest payment requirements within the next year. The next bond interest amounts and payment dates are about $5 million due Dec. 15 and around $19 million due April 15. Moody's additionally is concerned that Exide's customers may look to alternative suppliers for both existing and new battery contracts in the event that Exide's financial situation deteriorates further

Moody's revises Korea Tobacco outlook to positive

Moody's Investors Service on Monday changed the outlook of Baa2 foreign-currency long-term debt rating and foreign-currency issuer rating of Korea Tobacco & Ginseng Corporation to positive from stable. This reflects the recent changed outlook, to positive from stable, for the Republic of Korea's foreign-currency country ceiling of Baa2, which constrains KT&G's foreign-currency debt and issuer ratings. The debt affected by this outlook change is US$244.1million of 2.0% convertible notes due 2006.

The rating recognizes KT&G's strong franchise in the domestic cigarette market, its efforts to improve profitability and its conservative financial profile, Moody's said. The rating also reflects Moody's expectation that deregulation of the Korean tobacco market will increase competitive pressure from global peers over the long term.

Moody's put Bell Canada convertibles, other debt on review for possible downgrade

Moody's Investors Service on Monday placed the ratings of Bell Canada International Inc.'s senior unsecured notes (B2) and unsecured convertible subordinated debentures (B3), as well as the company's B2 issuer rating and senior unsecured rating on review for downgrade. Bell Canada on Monday announced a number of steps to be taken over the next few months that will address its liquidity problems. While this should assure adequate funding of BCI's cash needs until March 2003, Moody's noted that at that point the company's remaining debt of around C$730 million will largely be supported by a slightly reduced ownership in a restructured Telecom Americas Ltd., plus a 27.7% interest in Axtel and a 75.6% interest in Canbras.

These investments are not expected to generate cash for Bell Canada's ongoing needs for the foreseeable future, Moody's said. Therefore, Moody's said Bell Canada would need to liquidate assets to satisfy remaining debt, although values and marketability of the investments remain problematic.

Fitch downgrades Carlton Communications

Fitch downgraded Carlton Communications plc's senior unsecured rating to BBB+ from A- and kept the Rating Outlook at Negative.

Fitch said its action reflects "the increased leverage and financial risk associated with the issuance of a €638.6 million exchangeable bond maturing in 2007 that had not been envisaged in the agency's last rating announcement of 16 October 2001."

Fitch recognized the merits of the exchangeable bond from a corporate finance perspective because it generates up-front cash.

While net debt of the exchangeable is credit neutral, Fitch said gross debt "materially increases."

That increase, along with the risk that the conversion price of €41.2 is not achieved resulted in the rating action.

S&P downgrades Dillard's to junk

Standard & Poor's downgraded Dillard's Inc. to junk levels. Ratings affected include the company's debentures, notes, credit facility, reset put securities and medium-term note program, cut to BB+ from BBB-, its capital securities, cut to B+ from BB,

S&P downgrades IT Group

Standard & Poor's downgraded The IT Group Inc. and kept it on CreditWatch with negative implications.

Ratings affected include the company's credit facilities, cut to B+ from BB- and the senior subordinated notes, cut to B- from B. Also downgraded are Ohm Corp.'s convertibles, cut to B- from B. The convertibles are obligations of IT Group.

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