S&P upgrades YPF

Standard & Poor's revised its outlook on Repsol-YPF SA to stable from negative and confirmed its corporate credit at BBB and upgraded YPF SA including raising its $100 million 10% medium-term notes due 2028, $225 million 9.125% medium-term notes due 2009, $300 million 7.75% notes due 2007 and $350 million 8% medium-term notes due 2004 to BB from B+. It also upgraded Maxus Energy Corp.'s $260 million 9.375% notes due 2003 to BB from B+. The outlook is stable.

S&P said the actions reflect the combination of both companies' deleveraging in recent quarters, the expected maintenance of prudent policies and the resilience of the group to challenging conditions in

Argentina.

S&P said it raised YPF's foreign-currency rating because it perceives higher economic incentives for Repsol to support YPF in the context of more relaxed transfer and convertibility restrictions in Argentina.

Moreover, YPF's reduced debt burden means that any potential temporary financial assistance from Repsol would be of a manageable amount, S&P said.

The positive outlook on the local currency rating on YPF reflects the potential for an upgrade if the operating environment for the company in Argentina remains relatively stable and YPF continues to perform well.

YPF's better-than-expected resilience to the local crisis, during which it managed to reduce debt, its currently smooth debt maturities, and the existence of cross-default clauses between YPF's and some of Repsol's debt, all support YPF's ratings, notably through the increasing economic incentives for and decreasing cost of supporting YPF, S&P added.

S&P rates Ban Holding notes BB

Standard & Poor's assigned a BB rating to Bau Holding Strabag AG's €50 million 6.875% notes due 2007.

Fitch rates CSN notes B

Fitch Ratings assigned a B senior unsecured foreign currency rating to Companhia Siderurgica Nacional's $100 million one-year notes issued though its subsidiary CSN Islands IV Corp. on May 30. The outlook is stable.

Fitch said CSN's foreign currency rating is constrained by Brazil's B foreign currency rating.

With EBITDA of about R$2.2 billion, CSN's leverage, as measured by net debt-to-EBITDA, was 2.4 times at Dec. 31, 2002, while EBITDA-to-interest expense was about 4.7x, Fitch said.

Due to increased production volumes and a higher value-added product mix, Fitch expects CSN to continue to generate healthy EBITDA in 2003.

The rating reflects the company's position as one of the industry's lowest cost steel producers due to its ownership of the Casa de Pedra mine, one of the world's largest high-quality iron ore bodies, Fitch said. CSN also benefits from its modern production facilities, vertical integration and access to low-cost labor. The rating also factors in the concentrated nature of the Brazilian steel industry, which limits competition based solely upon price. In addition, transportation barriers minimize the amount of steel imported into the Brazilian market. These factors allow CSN to generate strong cash flows during troughs in the steel cycle and in economic downturns in Brazil.

S&P upgrades Polska Telefonia

Standard & Poor's upgraded Polska Telefonia Cyfrowa Sp. zoo, raising its €150 million bank loan due 2007 and €550 million bank loan due 2006 to BB+ from BB and PTC International Finance BV's $126.205 million 10.75% discount notes due 2007 and PTC International Finance II SA's $150 million 11.25% subordinated notes due 2009, €187.5 million 10.875% subordinated notes due 2008 and €282.75 million 11.25% subordinated notes due 2009 to BB- from B+. The outlook is stable.

S&P said the upgrade reflects Polska Telefonia's continued strong market position in the rapidly growing Polish mobile market, which has translated into strong revenue growth and profit growth, and sustained positive free operating cash flow.

Polska Telefonia used positive free operating cash flow to repay debt in the first quarter of 2003 of PLZ305.3 million ($80.4 million) and repaid PLZ977.8 million during 2002, thereby reducing its financial risk and future interest costs.

In addition, Polska Telefonia has announced a further tender for a portion of its outstanding bonds to continue deleverage of its balance sheet. Polska Telefonia's total lease-adjusted debt was PLZ5.2 billion at March 31, 2003.

Polska Telefonia maintained its market-leading position at the end of the first quarter of 2003 with 5.24 million subscribers and a 35.4% subscriber share of the mobile market, S&P noted. With overall market penetration at about 38.7% of the population, there is potential for further growth.

S&P puts Klabin on positive watch

Standard & Poor's put Klabin SA on CreditWatch positive including its corporate credit at CCC+.

S&P said the watch placement follows the company's announcement that it agreed to transfer its controlling stake in Riocell SA to Aracruz Celulose SA for approximately $610 million. Klabin has about $1 billion of total debt outstanding.

S&P said it expects the proceeds of the transaction to resolve Klabin's most critical short-term refinancing issues.

Large maturities in the short term were the main constraint to the rating, because the company's access to bank or capital markets was very limited after the liquidity problems Klabin faced in 2002.

Expected free cash flow of $170 million in 2003 allows for only partial repayment of such maturities, which totaled $470 million in 2003, including the put option of BrR500 million (approximately $170 million) debentures issued in 2002.

Fitch cuts Sequa, rates notes B+

Fitch Ratings downgraded Sequa Corp.'s existing senior unsecured debt to B+ from BB- and assigned a rating of B+ to its new $100 million senior unsecured notes. The outlook is now stable.

Fitch said the downgrade primarily reflects Sequa's continued weak financial performance which has resulted in poor cash flow generation and weak credit protection measures for the rating category.

For the 12 months ending March 31, 2003, credit statistics were relatively flat when compared to the two prior fiscal years, with a leverage ratio, as defined by debt to EBITDA, of 4.6 times, and interest coverage of 2.4x.

Based on the cyclical nature of most of Sequa's businesses and the current weak economic environment, Fitch expects that Sequa's financial results will continue to be pressured over the intermediate term, particularly at its commercial aerospace and automotive businesses.

As such, Sequa's down cycle appears to be lasting longer than Fitch had initially expected.

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