S&P puts Interstate Bakeries on watch

Standard & Poor's put Interstate Bakeries Corp. on CreditWatch with negative implications including its bank loan at BBB-.

S&P said the watch placement reflects Interstates Bakeries' current weak operating performance, which has resulted in credit measures below the current rating level.

Furthermore, due to the weak operating results, Interstate Bakeries is in negotiation with its lenders to amend the financial covenants on its secured revolving credit facility, S&P said.

The drop in earnings reflects the impact of higher energy costs, health care benefits payments, and lower sweet goods sales.

Moody's rates Oxford's loan Ba2

Moody's Investors Service rated Oxford Health Plan's $400 million senior secured bank term loan due 2009 and $50 million revolver due 2008 at Ba2. Furthermore, the rating outlook was changed to positive due to the resolution of the company's outstanding shareholder litigation for $225 million.

Proceeds from the proposed facility will be used to refinance existing bank debt, make payments on shareholder litigation and for general corporate purposes.

Ratings reflect relatively favorable market positioning, good regulated subsidiary dividend capacity relative to debt and good capital adequacy levels, Moody's said.

However, the ratings also reflect concentration risk in a single market characterized by economic weakness and rising medical cost trends, Moody's added.

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