Moody's cuts LSP Energy

Moody's Investors Service downgraded LSP Energy LP's senior debt securities to B2 from B1. The outlook is negative.

Moody's said the action incorporates the voluntary bankruptcy filing by LSP's parent company NRG Energy, Inc. and certain of NRG's U.S. affiliates.

LSP Energy is a wholly-owned subsidiary of NRG and its plant is operated by NRG management.

The rating action also considers the weak operating performance at the plant due to outages that occurred during 2002 and acknowledges the weakened financial position of one of the project's principal off-takers, Aquila, Inc., Moody's said.

Moody's noted the uncertainty that may exist for bondholders in the event that LSP Energy were to become a part of the NRG bankruptcy. However, Moody's believes that this is unlikely given the separate nature of LSP with regard to management, operations, and segregation of cash flow and cash balances.

Moody's rates Kappa Beheer notes B2

Moody's Investors Service assigned a B2 rating to Kappa Beheer BV's new €95 million 10.625% senior subordinated bonds and confirmed its existing ratings including the existing senior subordinated bonds at B2. The outlook is stable.

Moody's said Kappa Beheer's ratings reflect its leading European positions in container and solid board and in corrugated and solid board packaging.

The ratings also recognize the relative margin stability of the group's combined operations within the context of the cyclical forestry products industry, the reasonably stable end-customer demand for its products and the expectation that industry consolidation will continue, thus improving price stability.

Nonetheless, the ratings recognize the cyclicality in supply of the corrugated packaging business, as well as the commodity and price-sensitive nature of this business, the price volatility of raw materials (particularly waste paper) and the relative inflexibility of production capacity in times of weak demand combined with the potential for new production capacity coming on-stream that could put further pressure on prices, Moody's said.

In addition, Moody's believes that the continued weak global economic climate, combined with the impact of a strengthening euro versus the dollar on supply in Europe, will place further pressure on prices.

Fitch rates MDM add on B

Fitch Ratings assigned a B rating to MDM Bank's $75 million add on to its $125 million 10.75% bonds due 2005.

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