S&P rates Scottish Annuity convert BBB-

Standard & Poor's assigned a BBB- rating to Scottish Annuity & Life Holdings Ltd.'s $100 million senior convertible notes. The outlook is stable.

The company currently has no debt other than a small amount of bank debt.

This issue will raise financial leverage to 20% with fixed-charge coverage of more than 6x. However, because of its rapid growth, both ratios are expected to improve over time, S&P said.

Scottish Annuity is expected to grow revenue by more than 50% in 2002 and by at least 20% in 2003.

Capital adequacy will decline because of rapid growth but it is expected to remain extremely strong.

Fitch rates Scottish Annuity convert BBB

Fitch Ratings assigned a rating of BBB to Scottish Annuity & Life Holdings Ltd.'s planned $100 million of convertible senior notes. The outlook is stable.

Fitch expects proceeds from the issue will be contributed to insurance company subsidiaries to maintain target capital levels and fund reserve credit trusts associated with offshore transactions.

The ratings reflect a view that operating performance and balance sheet fundamentals continue to be in line with expectations and are based on sound capitalization, reasonable operating plans, conservative investments and experienced management team that has demonstrated expertise operating in the reinsurance market, Fitch said.

The ratings also consider limited scale, which can lead to potentially more volatile mortality experience and the life reinsurance business grows. The primary operating challenge facing the company is establishing itself in a very competitive market.

Fitch expects financial leverage below 25%. Prior to the issue, Scottish had no debt outstanding. On a pro forma basis, financial leverage was 18% at Sept. 30. Fitch expects earnings-based interest coverage to be strong.

Moody's cuts El Paso unit outlook

Moody's Investors Service confirmed El Paso Energy Partners LP's ratings but changed the outlook to negative from stable.

Moody's also assigned a rating of B1 to the $150 million of senior subordinated notes that the company is issuing, which are part of the financing for its $782 million acquisition of a package consisting of the San Juan Basin midstream system and other assets from El Paso Corp.

S&P puts XM Satellite on watch

Standard & Poor's placed the ratings of XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc. on negative watch based on unmet near-term funding needs.

The company had $415 million in debt at Sept. 30.

Cash needs remain significant and current liquid assets are only expected to fund operations through first quarter. Near-term funding needs are a growing concern and failure to obtain a binding commitment for a significant amount of new capital by mid-December will result in a downgrade.

Operationally, XM continues to hit its targets, and leads its primary competitor, Sirius Satellite Radio Inc., in all phases of execution. The company also appears to have strong support from General Motors Corp, a shareholder and key business partner, S&P said.

Separately, GM may help XM lower its near-term funding needs by allowing XM to defer up to $200 million in payments to GM in exchange for debt or convertible securities, or stock. Then, XM would have to raise at least $200 million more and make modifications to its capital structure.

XM is in discussions with various existing and potential investors to satisfy GM's requirements and expects to reach final agreements by mid-December. Any material change to the original terms promised to debt holders would be viewed as tantamount to a default and result in an immediate downgrade.

Fitch rates Duke notes A

Fitch Ratings assigned an A rating to Duke Energy Corp.'s two new issues of senior notes aggregating $510 million. The offerings include $110 million five-year and $400 million 10-year notes, with proceeds to repay commercial paper and for general corporate purposes.

The outlook is negative, due to continued weakness in merchant energy markets, uncertain financial impact of on-going investigations and execution risk associated with the plan to raise some $1 billion from non-core asset sales over the next year.

Duke's liquidity position is relatively strong, Fitch said.

Both Duke Energy and Duke Capital recently renewed their bank credit facilities that total about $3.4 billion. About $1.5 billion is currently available under the various credit agreements.

Duke also has temporary committed credit facilities with financial institutions totaling $1 billion that provide an additional liquidity cushion to meet debt maturities of about $1.3 billion in 2003.

Fitch rates General Mills

Fitch Ratings assigned a rating of BBB+ to General Mills Inc.'s $485 million five year notes. The outlook is negative.

While this refinancing will not have a significant effect on General Mills' credit statistics, it will extend the maturities for $485 million of debt, reducing short-term liquidity risk and refinancing risk.

General Mills' credit statistics were total debt-to-EBITDA of 5.4x and EBITDA-to-interest of 3.2x for the last 12 months ended Aug. 25.

Although the company's credit statistics are weak for the rating category, they are expected to improve through stronger operating performance and debt reduction in the near-to-intermediate term.

Moody's rates XL preferreds

Moody's assigned an A3 rating to the perpetual retail preferred securities of XL Capital Ltd.

The outlook is stable.

S&P cuts Nuevo Energy

Standard & Poor's downgraded Nuevo Energy Co. and removed it from CreditWatch with negative implications. The outlook is stable. Ratings lowered include Nuevo Energy's $115 million 5.75% term convertible securities series A, cut to B- from B, and $150 million 9.375% senior subordinated notes due 2010 and $257.31 million 9.5% senior subordinated notes due 2008, cut to B from B+.

S&P said it lowered Nuevo Energy because of the company's continuing inability to meaningfully delever during an extended period of unusually high oil and gas prices.

The ratings action also reflects the vulnerability of the company's challenging asset base and highly leveraged balance sheet to downward movements in oil prices, S&P added.

Entering 2002, S&P said it had expected Nuevo Energy to take material action to strengthen the company's financial profile and reverse asset declines. Although the company has made small strides toward deleveraging in 2002 with cost reductions, marginal assets sales and modest debt reduction with free cash flow in 2002, the recent acquisition of Athanor Resources Inc. increased debt levels.

While the acquisition of Athanor strengthens Nuevo Energy's reserve base and provides decent growth opportunities and a measure of commodity diversification, the significant reliance on debt to fund this transaction further heightens S&P's concerns about Nuevo Energy's ability to achieve credit measures commensurate with a BB corporate credit rating over the intermediate term.

Although credit protection measures have improved in 2002, credit protection measures remain weak with last 12 month EBITDAX/interest coverage of about 2.9 times and total debt/EBITDAX of approximately 3.4x times as of Sept. 30, 2002, S&P said.

S&P added that it expects Nuevo Energy to demonstrate mediocre near-term cash flow protection, with earnings before interest, taxes, depreciation, amortization, and exploration (EBITDAX) expense less planned capital spending ($70-80 million) interest coverage of between 1 time and 1.5x. Various overhead and capital cost reductions could provide additional support.

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