Moody's puts New York Community trust preferreds on upgrade review

Moody's Investors Service put the trust preferred stock of New York Community Bancorp, Inc. on review for possible upgrade. The securities, Haven Capital Trust I and Haven Capital Trust II and both rated B2, were originally issued by Haven Bancorp, which was acquired by New York Community Bancorp in November 2000.

Moody's said the review reflects the stronger franchises and improved prospects for New York Community Bancorp following its acquisition and integration of Richmond County Financial Corp.

Moody's added that it will look at New York Community Bancorp's plans for further expansion, its underwriting discipline and credit quality and on the adequacy of its liquidity and capital.

Moody's lowers O'Sullivan outlook

Moody's Investors Service lowered its outlook on O'Sullivan Industries, Inc. and its parent O'Sullivan Industries Holdings, Inc. to negative from stable. Ratings affected include O'Sullivan Industries, Inc.'s $40 million senior secured revolving credit facility maturing 2005, $26.6 million senior secured term loan A maturing 2005 and $87.7 million senior secured term loan B maturing 2007, all rated B1, and its $100 million 13.375% senior subordinated notes due 2009 at B3; and O'Sullivan Industries Holdings, Inc.'s $18.7 million senior discount note due 2009 at Caa1.

Moody's said the lower outlook reflects O'Sullivan's exposure to "a continued challenging business environment for the ready-to-assemble furniture industry."

The sluggish economy and computer sales growth has led to retail store closings, bankruptcies and liquidations, particularly by O'Sullivan's main customers, office superstores and mass merchandisers, Moody's said, adding that there is unlikely to be a dramatic mentimprove in the near term.

"Retailers continue to manage inventories very carefully, and consumers are migrating toward promotional merchandise," the rating agency commented.

However Moody's noted O'Sullivan has improved cash flow generation by closing one of its facilities and by reducing inventories. Also, particleboard and fiberboard prices have declined to near historical lows.

Moody's rates Sinclair Broadcast new notes B2

Moody's Investors Service assigned a B2 rating to Sinclair Broadcast Group Inc.'s new offering of $300 million of senior subordinated notes due 2012. The outlook is stable. Moody's previously confirmed Sinclair's ratings in November 2001.

The note offering does not affect Sinclair's leverage but should improve its ability to service its debt, Moody's commented.

Moody's said Sinclair suffers from the ongoing weakness in the advertising market and its negative impact on the company's leverage as well as Sinclair's high capital expenditures and rising programming costs. The company also has lower ranked stations which receive proportionally less advertising revenues during periods of economic weakness.

On the positive side, Sinclair has a broad portfolio of television stations and high number of station duopolies, Moody's said. The rating agency described asset coverage of debt as meaningful, particularly in light of the changing regulatory environment which is expected to increase demand for television stations.

"The ratings are also supported by management's interest in swaps over acquisitions in order to enhance its duopoly positions and a sizable asset sale strategy as a means of de-leveraging," the rating agency added.

Moody's raises outlook on JC Penney senior implied

Moody's Investors Service raised its outlook on J.C. Penney Co., Inc.'s senior implied rating to stable from negative, left the outlook at negative on the senior unsecured debt and confirmed the company's existing ratings. Among the $6.2 billion of debt securities affected are J.C. Penney's senior unsecured debt, medium-term notes, issuer rating and senior implied rating at Ba2 and its convertible subordinated notes at Ba3.

Moody's said its action reflects "management's success in stemming the multi-year deterioration in operating performance and in achieving significant improvement in profitability in 2001at both the department stores and Eckerd drug stores."

The outlook on the senior unsecured debt remains negative pending an assessment of the structure of the revolving credit facility that is to be renewed later in 2002, Moody's said.

"Penney's ratings reflect the challenge that the company continues to face in sustaining the improvements that it has already achieved and in narrowing the gap between its level of profitability and its peers," the rating agency commented.

Moody's confirms Maxxam

Moody's Investors Service confirmed its Caa1 rating on Maxxam Group Holdings Inc.'s $88 million of 12% guaranteed senior secured notes due 2003, concluding a review for possible downgrade begun on Jan. 29, 2002. The outlook remains negative.

Moody's said the rating reflects the potential risk to timely debt service from the voluntary Chapter 11 bankruptcy filing of Kaiser Aluminum Corp. and the absence of earnings and dividends from the company's forest products division. However they benefit from a senior unsecured guarantee from the parent Maxxam Inc.

Moody's added that it sees two primary developments that could result in a downgrade of Maxxam Group Holdings: an impact on the company from Kaiser's bankruptcy proceedings or changes that affect the parent company guarantee.

Moody's downgrades Acterna

Moody's Investors Service downgraded Acterna LLC, with actions including lowering its $275 million 9.75% senior subordinate notes due 2008 from B3 to Caa3. The outlook is stable.

Moody's said its action reflects Acterna's greatly diminished financial flexibility compounded by a worsening operating environment for selling communication test equipment.

However the company benefits from support from its equity sponsor, Clayton, Dubilier & Rice, and leadership in some segments of the communications test market.

Cash outflows will likely exceed cash generated from operations and working capital over the next 12 months and Acterna will use its revolving credit facility, whatever working capital it can generate, and the possible sale of non-core assets until it returns to operating profitability, Moody's said.

"While the Acterna business plan projects that it has the ability to meet these obligations, the margin for error is small and will rely heavily on working capital management," the rating agency added.

Moody's cautions on Conseco

Moody's Investors Service cautioned that Conseco, Inc. has "little room for error" in its efforts to show it can meet all its obligations due in 2002.

Conseco must give its accountants a viable plan by March 31 in order to obtain an unqualified opinion on its financial statements for the year to Dec. 31, 2001, Moody's said.

"Moody's believes that Conseco has made progress in executing its plans for generating cash from alternative cash flow sources, with several transactions completed or nearing completion," the rating agency added.

However, without an unqualified opinion Conseco will likely be downgraded two or more notches, Moody's warned.

Moody's confirms Reliance Industries

Moody's Investors Service confirmed Reliance Industries Ltd.'s senior unsecured debt at Ba2, affecting $900 million of debt.

Moody's said its announcement follows news that Reliance Industries will merge via a stock swap with its majority-owned daughter company Reliance Petroleum Ltd.

The rating remains constrained by the Indian sovereign ceiling, Moody's added.

Moody's described the financing as conservative and said it would result in only a moderate deterioration in debt protection measures. At the same time, the combined petrochemicals and textiles group will benefit from increased size and increased diversification as well as some modest synergy.

Moody's lowers National Steel

Moody's Investors Service downgraded National Steel Corp., affecting $390 million of debt. Ratings affected include National Steel's senior secured first mortgage notes, lowered to Caa2 from Caa1 and its senior unsecured industrial revenue bonds, lowered to Ca from Caa2.

Moody's said its action follows National Steel's filing for Chapter 11.

S&P downgrades Primus notes

Standard & Poor's downgraded some ratings of Primus Telecommunications Group Inc. and removed the company from CreditWatch with negative implications. The outlook is negative.

Ratings affected include Primus' corporate credit rating, confirmed at CCC+, its $225 million 11.75% senior notes due 2004, $150 million 9.875% senior notes due 2008, $200 million 11.25% senior notes due 2009 and $200 million senior notes due 2009, all lowered to CCC- from CCC, and its $300 million 5.75% convertible subordinated debentures due 2007, confirmed at CCC-.

S&P downgrades RCN

Standard & Poor's downgraded RCN Corp. and kept the company on CreditWatch with negative implications.

Ratings lowered include RCN's $225 million 10% senior notes due 2007, $601 million 11.125% senior discount notes due 2007, $567 million 9.8% senior discount notes due 2008, $375 million 10.125% senior notes due 2010 and $256.755 million 11% senior discount notes due 2008, all lowered to CCC- from B- and its $1 billion credit facility due 2006, lowered to CCC+ from B+.

S&P rates Iron Mountain loan BB

Standard & Poor's assigned a BB rating to Iron Mountain Inc.'s $250 million tranche B term loan due 2008.

S&P downgrades American Cellular

Standard & Poor's downgraded American Cellular Corp. and put it on CreditWatch with negative implications.

Ratings affected include American Cellular's $300 million revolver due 2007, $700 million term loan A due 2007, $350 million term loan B due 2008 and $400 million term loan C due 2009, all lowered to B from BB-, and its $450 million 9.5% senior subordinated notes due 2009 and $250 million 9.5% senior subordinated notes due 2009, lowered to CCC+ from B.

S&P downgrades Dobson

Standard & Poor's downgraded Dobson Communications Corp. and put the company on CreditWatch with negative implications, changed from CreditWatch with developing implications.

Ratings affected include Dobson's $300 million 10.875% senior notes due 2010, lowered to B- from B, and Dobson Operating Co. LLC's $925 million senior secured bank loan due 2008, lowered to B+ from BB-.

S&P cuts National Steel

Standard & Poor's downgraded National Steel Corp. including lowering its $116 million 8.375% first mortgage bonds due 2006 and $175 million 9.875% first mortgage bonds series A due 2009 to D from CCC+.

Moody's confirms Comstock

Moody's Investors Service assigned a B2 rating to Comstock Resources' $75 million add-on to its 11.25% senior unsecured notes due 2007 and confirmed the B2 rating on its existing $145 million 11.25% senior unsecured notes due 2007. The outlook is negative.

Moody's said the negative outlook reflects expected weaker 2002 natural gas prices at a time when Comstock is carrying elevated post-acquisition leverage and post-acquisition reduced liquidity, an uncertain first quarter 2002 pro-forma sequential quarter production trend and a need to clearly establish a favorable production trend.

Moody's raises Service Corp. outlook

Moody's Investors Service confirmed its ratings on Service Corporation International and revised the outlook to positive from stable. Ratings affected include Service Corp.'s $249 million senior unsecured credit facility due 2002 and various series of senior unsecured notes, all rated B1, and its $345 million senior subordinated convertible notes due 2008, rated B3.

Moody's said the positive outlook reflects "meaningful advancements in debt reduction, assets sales, cost reductions and new business initiatives."

At the end of 2001, Service Corp. reported debt of $2.5 billion, down 23% from a year earlier and 41% from its peak of $4.2 billion in 1999, Moody's said.

In January the company announced a joint venture for its U.K. operations that resulted in $273 million in net after-tax cash proceeds and a 20% retained interest in these operations. An additional $250-$350 million in asset sales proceeds are expected in calendar 2002. Proceeds are expected to be used to reduce debt including sizable near-term maturities, Moody's said.

Fitch says tariffs will benefit U.S. Steel

Fitch Ratings said President Bush's decision to enact tariffs of 8%-30% on steel imports will have a positive impact on U.S. Steel, which it rates at BB with a stable outlook.

Order rates have healthily outperformed 2001's book since the beginning of the year, yet it remains to be seen how much of these orders is new business activity as opposed to buying in advance of the long-anticipated tariffs, Fitch said.

Once the new import quotas are reached, any real increases in the demand for steel should cause prices to rise automatically after producers have raised their collective tonnage to 85% or so of capacity, the rating agency added.

If this occurs, U.S. Steel could return to breakeven this year.

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