S&P rates BJ Services convertibles at BBB+

Standard & Poor's assigned a BBB+ issue rating to BJ Services Co.'s $449 million face value ($335 million proceeds) senior unsecured convertible notes due 2022. The outlook is stable.

The transaction allows BJ Services to fund its pending $450 million acquisition of OSCA Inc. with debt on relatively attractive terms, noted S&P analyst Daniel Volpi.

Although the convertible notes include a put option, first exercisable in year three, S&P believes that the company's strong free cash flow and availability on bank credit lines would allow the company to easily address the put.

The ratings reflect moderate financial policies and a very strong competitive position in the North American pressure-pumping market. BJ Services is the third-largest pressure-pumping services provider behind strong competitors Halliburton Co. and Schlumberger Ltd.

The stable outlook reflects expectations that BJ Services will continue to follow conservative financial policies. The outlook may be revised to positive as the North American petroleum services industry recovers and the company begins to fortify its capital structure.

S&P rates TJX bank revolvers at A-

Standard & Poor's assigned an A- rating to TJX Cos. Inc.'s $300 million 364-day revolving credit facility that matures on March 25, 2003, and its $350 million revolving credit facility that matures on March 26, 2007.

Also, S&P affirmed the A- long-term and'A-2 short-term ratings on TJX. The outlook is stable.

The ratings reflect a leading position in off-price retailing as well as strong profitability measures and cash flow generating capabilities, said S&P analyst Diane Shand.

Operating and financial measures have risen meaningfully since 1997 due to success at integrating and revitalizing Marshalls, which it acquired in 1995, and its disciplined operating strategy.

Rating stability is based on the expectation that TJX will maintain a commanding presence in off-price apparel retailing and strong operating and financial performance. Capital spending and common stock buybacks are expected to be commensurate with management's commitment to a solid capital structure.

S&P affirms Starwood at BBB-

Standard & Poor's affirmed the BBB- corporate credit and notes rating of Starwood Hotels & Resorts Worldwide Inc. and took it off watch.

The watch resolution follows Starwood's successful sale of $1.5 billion in senior notes with proceeds used to repay all of its increasing-rate notes and part of its senior credit facility.

The outlook is negative.

Credit measures remain weak for the rating following the significant decline in operating performance in the second half of 2001, said S&P credit analyst Craig Parmelee.

The ratings could be lowered if a recovery in the lodging industry fails to take hold in 2002 and if Starwood does not apply free cash flow to debt reduction, improving credit measures.

S&P expects a gradual industry recovery in 2002 from the weaker 2001 trends and from the effects of the Sept. 11 terrorist attacks. Industry data through early April support this. S&P expects Starwood will improve its credit measures in 2002, primarily through using free cash flow to reduce debt.

Additional flexibility stems from the potential sale of noncore assets, such as the CIGA portfolio, which may be divested over time as market conditions allow. S&P expects proceeds to be applied to reducing leverage.

S&P cuts Qwest to BBB-

Standard & Poor's lowered its corporate credit ratings on Qwest Communications International Inc. and its subsidiaries to BBB- from BBB following the company's revision to revenue and cash flow guidance downward for 2002.

Also, S&P placed the ratings on watch with negative implications. Total debt at year-end 2001 was $25 billion.

The performance revision is significantly below what S&P had expected and reflects more sustained pricing pressure, intense competition, and weak demand in many of Qwest's product and services. This includes the core local exchange business, where access lines losses have not abated.

In response, the company is reducing capital expenditure levels to roughly match the decline in operating cash flow, in order to be free cash flow neutral in 2002. In addition, Qwest accelerated the timetable for asset sales, the most prominent of which are directory and wireless businesses.

Obtaining definitive asset sale agreements during the next two quarters has now become the most critical item in S&P's analysis.

At this juncture, liquidity appears adequate to meet 2002 debt maturities. However, even with the recent covenant amendment, if operating results decline beyond what the company now anticipates, meeting bank covenants, particularly when the debt to EBITDA test tightens to 4 times for the fourth quarter, could become a concern.

Fitch cuts Qwest to BBB-

Fitch Ratings downgraded the senior unsecured debt ratings for Qwest Communications International Inc., and subsidiaries, to BBB- from BBB. Additionally, the senior unsecured debt rating for Qwest Corp. was downgraded to BBB from BBB+. The commercial paper ratings of Qwest Capital Funding and Qwest Corp. remain at F-3.

All the ratings remain on negative outlook.

Moody's cuts Cummins to Ba1 from Baa3

Moody's lowered the long-term debt ratings of Cummins Inc. to Ba1 from Baa3 and the short-term debt ratings to Not-Prime from Prime-3. The rating outlook is stable.

The downgrades reflect an expectation of continued earnings and cash flow pressures at Cummins due to cyclical and structural weaknesses in certain lines of business. Consequently, cash generation and debt protection measurements are likely to remain constrained into 2003.

Moreover, Moody's believes that the long-term cyclicality of the heavy-duty and medium-duty truck and bus engine sectors, which account for 27% of the company's total revenues, will continue to contribute a significant degree of volatility to Cummins' operating performance.

The stable rating outlook anticipates that these restructuring initiatives will enable the company to maintain a competitive position in its core business, and will help strengthen returns over the longer-term. The outlook also anticipates that the company will be able to renew its $500 million credit facility bank credit facility in a timely manner and on satisfactory terms.

The facility, which currently has $65 million outstanding, enhances Cummins' financial flexibility, but is scheduled to mature during early 2003.

Fitch affirms Cendant at BBB+

Fitch Ratings affirmed a BBB+ rating for Cendant Corp.'s senior unsecured debt, a BBB rating for its subordinated debt and an F2 rating for its commercial paper following the announcement to acquire NRT Inc.

However, Fitch changed the outlook to negative.

Fitch rates new Viacom notes at A-

Fitch Ratings assigned a senior unsecured rating of A- to Viacom Inc.'s new $700 million 5-year senior unsecured notes. Fitch also rated Viacom's $4.75 billion commercial paper program at F2. The outlook is stable.

Fitch assigns AA rating to Home Depot senior notes

Fitch Ratings assigned a rating of AA to The Home Depot Inc.'s $1 billion of senior notes and F1+ to its commercial paper. The outlook is stable.

Fitch revises American Express outlook to stable

Fitch Ratings revised the outlook for American Express Co. and subsidiaries to stable from negative.

Also, Fitch affirmed the American Express senior debt at A+, commercial paper at F1 and the individual rating at B.

Moody's raises Lennar outlook

Moody's Investors Service affirmed all debt ratings of Lennar Corp. and changed to outlook to positive from stable due to the successful integration of U.S Home and two smaller acquisitions. Affirmed ratings include Ba1 on $271.5 million 7.625% senior notes due March 1, 2009, $301.3 million 9.95% senior notes due May 1, 2010, $256.9 million 3.875% zero-coupon convertible senior debentures due July 29, 2018, $715 million revolver due May 2, 2005, $300 million 364-day revolver and $395 million term loan B due May 2, 2007, Ba3 on $235.9 million 5.125% zero-coupon convertible senior subordinated notes due April 4, 2021 and Ba1 senior implied rating and issuer rating.

Moody's said the positive outlook reflects Lennar's long and consistent history of revenue and earnings growth, strong equity base, considerable geographical diversification and positive real cash flow generation for the past four years, "which is uncommon for a homebuilder."

Ratings also reflect the company's "appetite for acquisitions", an ongoing share repurchase program, a larger-than-industry-average land position, its off-balance sheet joint venture and partnership debt and the cyclical nature of the industry, Moody's said.

S&P downgrades Telewest

Standard & Poor's downgraded Telewest Communications plc and kept it on CreditWatch with negative implications.

Ratings affected include Telewest's various notes and convertibles, cut to CCC- from B, Telewest Communications Networks Ltd. bank loans, cut to B- from BB, and Telewest Finance (Jersey) Ltd.'s convertibles, cut to CCC- from B.

Moody's cuts Cummins to junk

Moody's Investors Service downgraded Cummins Inc. to junk, lowering its long-term debt to Ba1 from Baa3 and its short-term debt to Not-Prime from Prime-3. The outlook is stable. A total of $1.9 billion of debt is affected.

Moody's said it lowered Cummins because it expects continued earnings and cash flow pressures at Cummins due to cyclical and structural weaknesses in some business lines.

Cash generation and debt protection measurements are likely to remain constrained into 2003, the rating agency continued. It also believes that the long-term cyclicality of the heavy-duty and medium-duty truck and bus engine sectors, which account for 27% of Cummins' total revenues, will continue to contribute a significant degree of volatility to Cummins' operating performance.

Positives include Cummins' business diversification initiatives and restructuring actions being implemented during this difficult period, Moody's said.

The stable outlook indicates that Moody's sees these restructuring initiatives enabling the company to maintain a competitive position in its core business and helping strengthen returns over the longer-term.

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