S&P rates Select Medical notes B

Standard & Poor's assigned a B rating to Select Medical Corp.'s proposed $175 million senior subordinated notes due 2013 and confirmed its existing ratings including its senior subordinated debt at B. The outlook remains stable.

S&P said Select Medical's ratings reflect its relatively narrow service niche, risk of future adverse changes in reimbursement and ongoing expansion efforts that may limit its ability to extend its recent successes.

By using a strategy that includes a combination of acquisitions and new development, Select Medical has established itself as the second-largest operator of specialty acute-care hospitals for long-term-stay patients (LTACs) in the United States, and the second-largest operator of outpatient rehabilitation clinics, S&P noted.

The company remains vulnerable to changes in reimbursement, S&P said. Although it appears Medicare's prospective payment system for LTACs will be favorable for the company, future adverse changes could have a significant effect, because Medicare contributes 40% of Select Medical's total revenues. The currently favorable managed-care environment is expected to moderate in the next year or two.

A new equity offering in 2001 contributed to a reduction in lease-adjusted debt to capitalization to 59%, as of Dec. 31, 2002, from about 69% in 2000, S&P said. Also, the company's funds from operations to lease-adjusted debt of 30% and its 3.4x EBITDA interest coverage provide the cushion for Select to acquire Kessler without affecting its rating.

Moody's raises CSN outlook, rates notes B2

Moody's Investors Service assigned a B2 rating to Companhia Siderurgica Nacional's planned $300 million senior unsecured notes due 2008 and confirmed its existing ratings including CSN Iron SA's 9.125% global bonds at B2. The outlook was changed to stable from negative.

Moody's said the rating confirmation reflects CSN's position as the leading integrated steel producer in Brazil, its relatively low cost production profile given the company's ownership of certain key raw materials such as iron ore and limestone, and its strong position in value-added products such as galvanized steel and tin plate.

However, the rating also considers CSN's continued high, although improving, leverage position; modest debt protection measures following significant debt financed capital expansion programs in recent years; refinancing risk, given the level of short-term debt in the capital structure; and the cyclical commodity pressures inherent in the steel industry. High dividend payment levels, and the company's exposure, from time to time, to currency fluctuations between the reais and the US dollar on raw material purchases are additional factors in the rating.

The stable rating outlook reflects Moody's view that with a majority of CSN's restructuring program now complete the company will be able to deploy a greater proportion of cash flow to debt reduction and that debt protection measures should show continued improvement.

CSN's efforts to lengthen the tenor of its debt maturities are a favorable development, Moody's added.

Moody's upgrades Omega preferred, all ratings on upgrade review

Moody's Investors Service upgraded Omega Healthcare Investors, Inc.'s preferred stock to Caa2 from Caa3 and put all the REIT's ratings on review for upgrade including its senior unsecured debt at B3.

Moody's said the action follows Omega's announcement that its has declared a full reinstatement of accrued unpaid dividends on classes of its preferred stock for a total of $55 million and that it intends to pay future dividends.

Omega has also recently refinanced its two credit lines that were maturing in December 2003 and June 2005 with a $225 million facility from GE Healthcare Financial Services, Moody's noted. Earnings have improved as Omega has sold properties and renegotiated leases with tenants.

Moody's said it is encouraged by the progress Omega has been recently making in its strategic trajectory and financial flexibility.

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