S&P downgrades GrafTech

Standard & Poor's said it lowered GrafTech International Ltd.'s corporate credit rating to B from B+, senior secured debt rating to B+ from BB- and senior unsecured debt to B- from B. S&P also lowered the convertible note rating to CCC+ from B-.

The outlook is stable.

S&P said the downgrade reflects S&P's reassessment of the company's prospects. Although GrafTech's financial performance will improve in 2005 due to strong graphite electrode fundamentals, financial performance is expected to be below levels appropriate for a B+ corporate credit rating.

The ratings on GrafTech reflect its aggressive financial leverage, poor free cash flow generation, significant exposure to the cyclical steel industry, and key raw-material cost pressure, particularly for needle coke, S&P said. Somewhat offsetting these negative factors are the company's favorable cost position compared with its competitors, good market position in graphite electrodes, and currently favorable industry conditions.

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