S&P rates Selective issue at BBB

Standard & Poor's assigned a BBB senior debt rating to Selective Insurance Group Inc.'s proposed $100 million senior unsecured convertible notes.

The rating reflects a strong balance sheet at the holding company, demonstrated by pro forma financial leverage below 30% and interest coverage moderately above 3x after the debt offering, S&P said.

The outlook is stable.

S&P cuts Cablevision ratings

Standard & Poor's lowered Cablevision Systems Corp. ratings, including its senior unsecured debt to BB- from BB+, subordinated debt to B+ from BB- and preferred stock to B from B+.

The downgrade reflects a higher degree of uncertainty about ability to grow operating cash flows from cable services, S&P said.

Largely as a result of competitive factors, the company has lost 17,000 subscribers since the beginning of 2002 and projects basic subscriber losses for the full year of 2002 will be roughly between 1.0% and 1.5%.

If the company is not able to grow cash flows in 2003, it could require additional funding in the 2003 to 2004, S&P added.

Programming assets provide some source of potential liquidity, including majority ownership in Rainbow Media Holdings Inc.

However, the company has not articulated any specific plans for the sale of these investments.

The ratings could be lowered if the company is not able to maintain debt to annualized operating cash flow and debt to EBITDA in the area of 7x, excluding collateralized debt and preferred stock and including off-balance-sheet debt.

Moody's cuts NRG to Ca

Moody's Investors Service lowered the senior unsecured debt rating of NRG Energy Inc. to Ca from Caa1, in a belief that there is an increasing probability that NRG will default on debt service obligations.

The outlook is negative.

The downgrade and outlook reflect weak operating cash flows, weak liquidity and significant collateral requirements that remain unsatisfied, requiring additional forbearance from creditors, Moody's said.

The current waiver with the bank group expired on Friday.

NRG announced last week the sale of some of its eastern European properties, which if completed, would provide nearly $200 million by year-end. Other asset sales announcements are expected shortly.

Still, the process is likely to take months to execute and does little to bolster liquidity near-term, the rating agency added.

Further, NRG's parent, Xcel Energy, is constrained as to the support it can give NRG.

The Ca senior unsecured debt rating suggests modest expected recovery for bondholders under a default scenario. Of the $9.8 billion of consolidated NRG debt, some $5.8 billion is at the subsidiary or project level.

Fitch cuts Georgia-Pacific ratings

Fitch Ratings lowered the senior unsecured long-term debt ratings of Georgia-Pacific to BB+ from BBB-. The outlook is negative.

The downgrade followed Georgia-Pacific's announcement that it has delayed the planned separation into an investment-grade consumer products business and a non-investment grade building products business.

The outlook reflects concern regarding the refinancing of near-term obligations, which were to have been repaid in the course of the separation, Fitch said.

S&P notes Dominion forecast

Standard & Poor's said Dominion Resources Inc.'s (BBB+/stable/A-2) lower earnings forecast for 2003 will not affect current ratings.

S&P noted that certain adjustments by the company are noncash and the resulting weakening of forecast credit ratios, including leverage and cash flow coverages of interest and debt, is marginal.

Dominion management has committed to strengthening the highly leveraged balance sheet near term, most importantly by issuing equity, S&P said.

S&P notes Caremark redemption

Caremark Rx Inc.'s (BB+/positive) offer to redeem all of its 7% convertible subordinated debentures due 2029 is positive but will not have an impact on the ratings.

Given the current price level of Caremark common shares, S&P expects holders will elect to convert into stock, resulting in a minimal outlay of cash for the $200 million issue.

Thus, the move will improve debt leverage.

But S&P said continued growth of cash flows, additional debt reduction and a financial policy characterized by limited acquisitions are major determinants of the ratings.

S&P cuts NRG to D

Standard & Poor's lowered the ratings of NRG Energy Inc., including its senior notes and the 8.7% convertibles, to D from CCC.

The downgrades follow NRG and NRG South Central's notification to the bond trustee that they would not make payments due Monday on two NRG South Central issues.

While NRG is still working toward accomplishing a restructuring outside of bankruptcy, the ratings reflect the uncertainty of this resolution.

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