S&P rates proposed PSEG convert at BBB-

Standard & Poor's assigned a BBB- rating to Public Service Enterprise Group Inc.'s proposed $500 million of mandatory convertible trust preferreds. The outlook is stable.

PSEG has outstanding $1 billion of commercial paper, $525 million of preferred stock in addition to the proposed issue. The company's ability to service debt obligations wholly depends on dividends from its several subsidiaries.

PSEG has committed to deploy $200 million of the proceeds into PSEG Energy Holdings, an intermediate holding company whose principal subsidiaries are PSEG Global Inc. and PSEG Resources Inc.

The $200 million capital infusion will be in addition to $200 million from PSEG in March.

The outlook reflects expectations that PSEG Energy Holdings generation projects in development are completed in 2003, which should reduce the need for further capital infusions as the projects should yield cash flow, S&P said.

However, if these expectations are not realized, credit quality could suffer and the ratings lowered.

Moody's cuts Primus ratings

Moody's Investors Service lowered all ratings of Primus Telecommunications Group Inc., including the $71 million of 5.75% convertible subordinated global debentures due 2007 to Ca from Caa3. The outlook is negative.

The downgrade reflects concern that, despite recently improved operating metrics and lowered debt service carrying costs, Primus is unlikely to build sufficient liquidity to service its heavy debt burden, Moody's said. In particular, there can be no assurance of its ability to retire the $87 million of senior notes maturing in August 2004.

At the end of June, Primus recorded unrestricted cash of $62 million, which combined with expected cash flow should be sufficient to cover debt service and capital expenditures into 2004.

Intermediate-term liquidity pressure remains the largest depressant on Primus's ratings. Thus, Moody's said ratings improvement if Primus can demonstrate a committed financial solution, sufficient to allay liquidity concerns.

As of June 30, Primus had $362 million in net capital assets available to support $615 million in debt.

Based upon current values for wireline infrastructure assets, Moody's said unsecured debtholders face poor recovery prospects in a distress scenario.

S&P puts Broadwing on negative watch

Standard & Poor's placed the ratings for Broadwing Inc. on negative watch, including the convertible preferreds at B+.

The watch is based on concern that Broadwing may find it challenging to meet scheduled bank debt amortization in 2003 and 2004 in the absence of significant new capital and an amendment to its bank credit agreement, S&P said.

With projected liquidity of about $150 million at the end of 2002 and a forecast of moderate free cash flow in 2003, Broadwing is currently not well positioned to pay down about $230 million of bank debt in 2003.

In addition, S&P does not anticipate Broadwing will generate sufficient free cash flow to meet about another $1 billion of bank debt repayment in 2004.

Weak capital market conditions for the telecom sector is yet another obstacle to overcome in an effort to secure arrangements that could provide long-term financial flexibility.

Another reason for the watch is S&P's assessment that expected weak results may constrain overall profitability and free cash flow growth over the next several years.

Maintenance of the current rating depends on Broadwing quickly putting in place a realistic plan to meet liquidity needs. Without such a plan, a material downgrade is likely.

S&P cuts NRG ratings

Standard & Poor's lowered the corporate credit rating on NRG Energy Inc. to CCC from B+, along with other ratings. The ratings remain on negative watch.

The downgrade stems from a view that NRG's liquidity position is severely constrained and even if the banks continue to waive collateral requirements under the $2 billion construction revolver, NRG would be challenged to meet debt service requirements without significant asset sales, S&P said.

While the company has made some progress with asset sales, amounts have been minimal relative to what is needed and the bulk of proceeds are not expected to be realized until the fourth quarter. In addition, decreasing wholesale prices have hampered NRG's operating cash flow.

NRG's survival relies on significant asset sales, the amount and timing of which is uncertain.

The ratings on unit NRG Northeast Generating bonds and NRG South Central Generating bonds have been downgraded to a level reflecting the risk of consolidation in a bankruptcy.

S&P says SPX unchanged

Standard & Poor's said its rating on SPX Corp. are unchanged after the company announced a new $250 million stock repurchase program. S&P rates SPX's corporate credit at BB+ with a stable outlook.

S&P said SPX has an aggressive growth appetite but also generates strong free cash flow and has ample liquidity. Uses of free cash are expected to be balanced among acquisitions, share repurchases, and debt reduction.

Credit measures are expected to remain appropriate for the ratings, with total debt to EBITDA ranging between 2.5 times and 3.0x, and funds from operations to total debt averaging between 20% and 25%, S&P said.

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