Fitch confirms Tyco, off watch

Fitch Ratings assigned a BB rating to Tyco International Ltd.'s new convertible debentures, confirmed its existing ratings including its senior unsecured debt at BB and removed it from Rating Watch Negative. The outlook is negative.

Fitch said the removal from watch reflects positive actions at Tyco that have removed the immediate risk of further deterioration in the company's liquidity and other concerns such as corporate governance that were expressed earlier by Fitch. These actions include the installment of a new executive management team since July 2002, the completion of Tyco's internal investigation that found no significant fraud affecting the company's financial statements, and the completion of new financing including $4.5 billion of convertible debt and a $1.5 billion bank facility anticipated near the end of January or early February.

In addition, Tyco's liquidity would benefit from the cash proceeds of any asset sales although such sales are not anticipated to involve the company's core operations or to exceed 10% of total revenue.

Despite significant progress addressing short-term maturities, $3.6 billion of convertible debt that may be put to Tyco next November, together with cash requirements related to reserves for purchase accounting and restructuring, could potentially leave the company with nominally sufficient cash balances by calendar year-end, Fitch said.

In addition, concerns have yet to be fully addressed by the new management team about Tyco's overall capital structure, the degree to which Tyco allocates free cash flow to debt repayment or other uses, its operating performance and ability to meet internal cash generation forecasts, its long term strategic direction, and the reestablishment of full access to capital markets, Fitch added.

S&P cuts Jackson Products, on watch

Standard & Poor's downgraded Jackson Products Inc. and put it on CreditWatch with negative implications. Ratings lowered include Jackson Products' $105 million acquisition line due 2004 and $30 million revolver due 2004, cut to CCC from B-, and its $115 million 9.5% subordinated notes due 2005,c tu to CC from CCC.

S&P said the action is in response to significant near-term liquidity challenges that have heightened the company's financial risk.

Jackson Products faces a $2.5 million debt amortization payment associated with its senior debt on March 31, 2003, and a $5.5 million interest payment on its subordinated debt on April 15, 2003, S&P said.

As of Sept. 30, 2002, Jackson Products had about $2.5 million in bank credit facility availability and around $200,000 in cash.

Further straining liquidity is that Jackson Product's first two quarters usually require an investment in working capital, S&P noted. For the first six months of 2002, the firm used approximately $7.5 million in working capital.

As a result, it is highly likely that without a restructuring of the company's debt or an equity infusion, the company will not be able to meet its debt obligations, S&P said.

As a result of operating results that were below the firm's expectations, Jackson Products was in violation of its bank covenants at the end of the third quarter of 2002 (Sept. 30, 2002). The company received a forbearance agreement from its senior lenders through Jan. 31, 2003, and is currently in the process of extending the forbearance period, while it also works on a longer-term amendment to its bank credit agreement. However, bank negotiations could prove challenging as Jackson Products amended its bank agreement for the fifth time in March 2002, S&P said.

S&P cuts ABB

Standard & Poor's downgraded ABB Ltd. to junk including cutting its corporate credit rating to BB+ from BBB- and senior unsecured debt to BB- from BB+. The ratings were removed from CreditWatch with negative implications and a negative outlook assigned.

S&P said the downgrade reflects current refinancing risks to ABB arising from the use of excessive financial leverage at a time of significant near-term challenges, notably the continued adverse market sentiment toward the group's exposure to asbestos litigation, and ABB's strong reliance on short-term funding.

S&P said it is also concerned about implementation risks of the group's extensive cost savings and restructuring program, which is vital to improving the group's weak overall profitability.

Furthermore, the ability of ABB to generate free cash flows in financial year 2003 appears to be limited in view of the still uncertain economic outlook, high interest expense, cash requirements for restructuring, and the need to eliminate loss-making activities from its portfolio, S&P said.

As positives, S&P noted the strength of ABB's core automation and power technologies divisions, management's strong commitment to cut costs, as well as the group's significant deleveraging potential from pursuing the disposal of a number of valuable non-core assets.

Following the agreement of a new one-year revolving credit facility for $1.5 billion in December 2002, the previously vulnerable liquidity position of ABB has improved significantly, S&P said. In addition, ABB plans to generate complementary funding through a number of small disposals in the near term.

Moody's puts Constellation Brands on review

Moody's Investors Service put Constellation Brands, Inc. on review for possible downgrade. Ratings affected include Constellation's $200 million 8.5% senior subordinated notes due 2009 and $250 million 8.125% senior subordinated notes due 2012 at Ba3 and $200 million 8.625% senior unsecured notes due 2006, $200 million 8% senior unsecured notes due 2008, £80 million 8.5% senior unsecured notes due 2009 and £75 million 8.5% senior unsecured notes due 2009 at Ba2.

Moody's said it began the review in response to the announcement that the company may acquire or merge with Australian wine producer BRL Hardy and that both companies have signed non-solicitation and break fee agreements although no deal has been finalized.

The ratings review will focus on the financing structure for the potential transaction and will include a thorough review of business and financial risk pro-forma for the possible transactions, Moody's said.

S&P says ConMed unchanged

Standard & Poor's said ConMed Corp.'s ratings are unchanged including its corporate credit at BB- with a stable outlook after the company announced that it would be acquiring Bionx for approximately $48 million.

Bionx is expected to generate approximately $20 million of revenue in 2003, while expanding ConMed's offering in sports medicine products, S&P noted.

ConMed will finance the purchase using its $100 million revolving credit facility.

The company should continue to maintain adequate liquidity as it is expected to have more than $45 million of available borrowings under its facility after the close of the transaction, S&P said. Moreover, ConMed produced $28 million in cash from operations during the first nine months of 2002 and does not face any significant maturities until 2007.

S&P cuts Petrozuata, on watch

Standard & Poor's downgraded Petrozuata Finance Inc. and left it on CreditWatch with negative implications. Ratings lowered include Petrozuata's $300 million 7.63% bonds series A due 2009, $625 million 8.22% bonds series B due 2016 and $75 million 8.37% bonds series C due 2022, cut to B from B+.

S&P said the downgrade is in response to the continuing shutdown of operations that result from continuing strike action in Venezuela's oil and gas sector.

Petrozuata shut down production and processing operations in December 2002 due to a lack of natural gas and hydrogen supplies at the Jose upgrader complex, S&P noted. PDVSA supplies natural gas to Petrozuata and supplies feedstocks to third parties who produce and supply hydrogen to Petrozuata. These developments result from a continuing national strike that includes some management and employees of PDVSA against the Chavez government. The strike action has led to a near shutdown in domestic production and refining, a large drop in exports of crude oil and refined products, and growing civil unrest between the government and opposition groups.

Petrozuata's liquidity position is adequate for the very near term, S&P said. It includes a six-month debt service reserve of about $70 million that is held by the trustee and is sufficient to cover the next six-month debt payment due in April 2003.

S&P said it estimates that the company has a cash balance of about $200 million, based on fourth-quarter forecasts, taking the current curtailment into account, which will allow it to cover operating costs for some time; total operating costs for 2003 are forecast at $173 million and the company is deferring capital expenditures.

Moody's cuts Mohawk River

Moody's Investors Service downgraded Mohawk River Funding I, LLC's $174.7 million 7.09% senior secured notes to Ba2.

Moody's said the downgrade is in response to the recent rating action on El Paso Corp.

The rating is based on the margin created by the relationship between the swap agreements entered into between Niagara Mohawk Power Corporation and LG&E Westmoreland Rensselaer and Fulton Cogeneration Associates, LP as swap counterparties that were assigned to Mohawk River Funding I, LLC and the swap agreements between Mohawk River Funding I, LLC and El Paso Merchant Energy LP.

The rating is also based on El Paso's guarantee of El Paso Merchant Energy LP's obligations under the two swaps.

Mohawk River's rating is directly correlated to the ratings of Niagara Mohawk and El Paso because of the respective payment obligations under the various swaps, Moody's noted.

S&P says Georgia-Pacific unchanged

Standard & Poor's said Georgia-Pacific Corp.'s ratings are unchanged including its corporate credit rating at BB+ with a negative outlook following the company's announcement of a $315 million addition to its reserve for asbestos liabilities and defense costs (pretax and net of anticipated insurance recoveries) through 2012.

The company established a $350 million reserve last year covering periods through 2011, S&P noted. However, it experienced significantly greater than expected outlays during 2002, mostly as a result of higher settlement amounts for cases involving serious illness.

Georgia-Pacific spent (pretax and before insurance) about $44 million per quarter during the first nine months of 2002, twice as much as during the same period in 2001. The liability still seems manageable with insurance expected to cover a portion of Georgia-Pacific's costs for a number of years.

However, if asbestos-related payments continue to escalate, or if asbestos liabilities hamper Georgia-Pacific's access to capital for debt refinancing, ratings could be lowered, S&P said.

Moody's rates Universal Robina notes Ba3

Moody's Investors Service assigned a prospective Ba3 rating to Universal Robina Corp.'s planned offering of $150 million senior unsecured notes to be issued through URC Philippines Ltd. The outlook is stable.

Moody's said the rating recognizes the "very strong market position" of Universal Robina in the

Philippines' branded consumer food industry and the resultant stable operating cash flow.

In addition, Moody's acknowledges that management has demonstrated a track record in growing the business while maintaining good profit margins and in managing the currency risk exposures the company faces.

At the same time, the rating reflects risks associated with Universal Robina's exposure to adverse currency movements since its revenues are primarily earned in pesos but a significant percentage of its input costs and debt is denominated in U.S. dollars, Moody's added.

The rating also considers Universal Robina's acquisitive strategy in expanding into regional food businesses which is likely to continue and will increase its near term financial leverage.

Universal Robina continues to maintain relatively stable profit margins and generate stable operating cash flow to cover its working capital requirement, capital expenditure and dividend payment. Moody's noted the company has maintained a sound financial profile: total Debt/EBITDA of 2.5x, retained cash flow/debt of 28% and EBITDA/interest of 4.8x as at Sept. 30, 2002.

S&P rates Universal Robina notes BB

Standard & Poor's assigned a BB rating to Universal Robina Corp.'s planned $150 million notes due 2007. The outlook is stable.

Moody's rates Kamps B1

Moody's Investors Service assigned a B1 rating to Kamps AG's existing €250 million bond due 2005 and €325 million bond due 2009. The outlook is stable.

Moody's said the ratings are based on Kamps' high leverage, on the slow growth characteristics of the bakery industry, on the high degree of competition in its main market of Germany and on the various operational challenges that its new management has to deal with. The ratings also factor in that Kamps is the European leader in the bakery industry.

The B1 ratings do not factor in any support of Barilla and its financial partner apart from operational support and possibly equity should the 51% of Harry's be acquired, Moody's added.

Moody's said it expects that the adjusted debt/EBITDAR ratio will peak above 6 at the end of 2002, with an EBITDAR coverage just above 2 and a retained cash-flow to adjusted debt somewhat below 5%.

These ratios appear somewhat weak for the rating category but are partly affected by one-off factors in 2002, Moody's commented.

The rationale for the B1 senior implied rating is based on the expectation of a progressive improvement in particular the RCF to adjusted debt ratio should rise to 6/8% at the end of 2003 before the acquisition of 51% of Harry's, Moody's said. If financed without additional debt, this acquisition would further improve the credit metrics with RCF to adjusted debt closer to 10% in 2003 on a pro-forma basis (Harry's 100% consolidated).

Moody's lowers Reliance outlook

Moody's Investors Service lowered its outlook on Reliance Industries of India to negative from stable and confirmed its senior unsecured debt at Ba2, affecting $500 million of debt.

Moody's said the lower outlook reflects concerns relating to the recent aggressive internal and external expansion by the Reliance group and the growing business and financial risks associated with this rapid expansion.

In recent weeks and months, in addition to acquiring a significant minority position in the country's second-largest petrochemicals firm (IPCL) for a little over $500 million, Reliance has been expanding (or has announced its intentions to expand) significantly outside its well-protected, strong-margin petrochemicals business, Moody's said. This expansion has included merging with its sister company, Reliance Petroleum (one of the country's leading petroleum refiners); launching its new low-cost telecoms service across India with the goal to cover all cities and villages domestically in the near future; announced its intentions to build a nationwide petrol retailing network (of at least 1,500 stations); increased its stake in its power generation and transmission company, BSES; and made a major gas discovery on the south-western coast of India.

Moody's believes that this rapid expansion into liberalizing, more competitive markets will lead to weaker profitability and operating cashflow margins (in particular from the refining and telecom operations) and at the same time, investment levels are expected to increase significantly.

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