Moody's rates Scottish Power convertible Baa2

Moody's Investors Service confirmed the Baa1 senior unsecured rating of Scottish Power plc and assigned a provisional Baa2 rating to the new subordinated convertible bonds to be issued by Scottish Power (Finance) Jersey Ltd. that are guaranteed by the parent. The outlook is negative.

Senior unsecured ratings reflect recent improvement in operational performance, particularly at Pacificorp in the U.S. It also anticipates an increase in retained cash flow as a result of the announced dividend cut effective from 2003/04, as well as further operational improvements.

Ratings do not yet factor in the 2005 U.K. electricity price review, however.

The outlook reflects risks associated with the assumption that the ratio of retained cash flow to debt will improve over the next couple of years whilst free cash flow will be negative and net debt will rise.

Moody's cuts Duke

Moody's Investors Service downgraded Duke Energy Corp.'s long-term debt ratings, including its senior secured first mortgage bonds to A3 from A2 and senior unsecured debt to Baa1 from A3, but confirmed the commercial paper at Prime-2. Also downgraded were the ratings of Duke Capital Corp. and other subsidiaries. The outlook is stable.

However, Duke Energy Field Services remains on review for downgrade.

The downgrade was based on an expectation that there will be a need for continuing financial support for Duke Capital.

Moody's noted that Duke's management has stated it has flexibility under the statutes governing its ability to provide support to Duke Capital, as long as the utility maintains "adequate, efficient and reliable electric service" at "just and reasonable rates."

Consequently, Moody's believes Duke Energy's leverage ratios and coverage metrics will come under some pressure as the company has made clear its intention to avail itself of this flexibility to support Duke Capital and its investment grade ratings.

The outlook reflects the strength and stability of the Duke Energy utility system and credit metrics that appear to be solidly investment grade.

S&P confirms Tyco ratings

Standard & Poor's confirmed the BBB- senior ratings and stable outlook on Tyco International Ltd. and related entities, on the repurchase by Tyco International Group SA of its $750 million dealer remarketable securities due 2013.

Also impacting the confirmation were Tyco's disclosures that it plans to restate financial results for fiscal years 1998-2003 in connection with the ongoing review by the SEC.

Ratings reflect above-average business profile, moderate financial policies and improved liquidity.

Current ratings and outlook also incorporate expectations that resolution of issues such as the accounting matters and asset writedowns will be manageable in terms of cash outlays and will not materially affect liquidity.

Tyco has a stretched financial profile and only fair near-term liquidity, including execution risk in refinancing at least a portion of some $4.4 billion in near-term debt maturities. But credit protection measures should strengthen as free cash flow and excess cash balances are used to pay down debt, S&P said.

Availability under the $1.5 billion revolving credit facility should allow Tyco to repay about $2.5 billion of convertibles and $1.9 billion of other bonds. S&P expects that cash balances, free cash flow and the presumed ability to refinance debt will allow Tyco to maintain sufficient liquidity.

Although legacy issues remain, most of the turbulent issues and distractions the company faced during the recent past should now be behind it.

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