S&P rates Steel Dynamics at B

Standard & Poor's assigned a 'B' rating to Steel Dynamics Inc.'s $100 million of 4% convertible subordinated notes due 2012 and affirmed the BB- corporate credit rating. The outlook is stable.

The rating reflects an aggressive financial policy, as well as benefit from having non-unionized workforces, no retiree medical and pension expenses and a less capital-intensive production process.

While declining spot steel selling prices will affect profitability going forward, the company is expected to continue to generate free cash flow for debt reduction due to lower capital spending, S&P said.

Debt levels are high because of aggressive expansion, yet debt to EBITDA improved to 3.7x at Sept. 30 from 6x at Dec. 31, 2001.

At Sept. 30, the company had fair liquidity with $24 million in cash and full availability under its $75 million revolving bank credit facility.

The company benefits from a manageable debt maturity schedule and is currently well within compliance of financial covenants on its revolving credit facility.

The covenants step up - debt to EBITDA to 4x at Dec. 31 and 3.75x at June 30, 2003 while EBITDA interest coverage increases to 2.5x by June 30, 2003 - and could limit liquidity, S&P noted.

Moody's rates Steel Dynamics at B3

Moody's Investors Service assigned a B3 rating to Steel Dynamics Inc.'s $100 million of 4% convertible subordinated notes due 2012. The outlook is positive.

Ratings reflect difficult domestic steel market conditions and that weak demand among economic-sensitive end markets are putting renewed downward pressure on steel prices. Risks inherent in the company's energetic growth strategy also are factors in the ratings, Moody's said.

At the same time, the ratings recognize current profitability and increasing scale and product diversification.

Moody's changed Steel Dynamics' rating outlook to positive in September, due to improved cash flow and debt protection measures.

Factors that could lead to an upgrade include a strong start-up and market penetration on the part of the Columbia City mill, sustained high metal margins, strong cash flow and liquidity and deleveraging.

Adverse developments or problematic acquisitions could lead to a change to a stable or negative rating outlook.

The company has not drawn on its $75 million revolving credit facility.

At Sept. 30 debt to EBITDA was 3.6x.

S&P rates AEIS convert B-

Standard & Poor's assigned Advanced Energy Industries Inc. a B+ corporate credit rating and rated the 5% and 5.25% convetibles at B-. The outlook is negative.

Ratings reflect a good but narrow position in the cyclical semiconductor capital goods industry and recent operating losses, as well as its ample operational financial flexibility.

Because of substantial industry volatility, the company has been unprofitable since the June 2001 quarter and is not likely to return to profitability over the next several quarters, despite cost reductions, S&P said.

Cash balances of $189 million at Sept. 30 are sufficient for operational requirements, although future acquisitions could well be a call on cash balances. The company has opportunistically repurchased its debt in the open market.

The undrawn $25 million domestic revolving credit agreement, secured by substantially all assets other than certain intellectual property, expires in May 2003. The company is renegotiating a new credit line, S&P said.

Fitch affirms Lennar

Fitch Ratings affirmed Lennar Corp.'s ratings, including the senior subordinated convertible notes at BBB-. The outlook is stable.

Lennar's extensive liquidity position should allow it to weather a meaningful cyclical downturn and absorb acquisitions. Under a severe housing contraction, Lennar is expected to generate sufficient cash for obligations and manage its capital structure within the investment grade rating.

The rating incorporates the expectations that leverage may periodically spike outside of the targeted range of 35-45% as a result of acquisitions, but that it will be prudently and quickly managed down within that range thereafter, Fitch said.

Interest coverage in the 6.6x range is considered in the high-mid range for the rating category.

Financial flexibility supported by $883.7 million in external liquidity as of Aug. 31.

There are no meaningful public debt maturities before 2009.

The $653 million revolving credit facility matures in April 2006, the $273 million 364-day revolving credit facility matures in April 2003 and the $393 million term B loan matures in May 2007.

The 0% coupon convertible senior subordinated notes are likely to be converted in 2003, potentially adding $271 million to shareholders' equity and eliminating $271 million in debt.

Moody's rates Lamar Media

Moody's Investors Service assigned a Ba3 rating to Lamar Media Corp's $260 million of senior subordinated notes due 2012 and confirmed the Lamar Advertising Co. $287 million of 5.25% senior convertible notes due 2007 at B2.

Ratings continue to reflect risks with the company's acquisition strategy, mitigated by asset value and relative stability of credit statistics, Moody's said.

The outlook is stable, considering a modest recovery in advertising and the expectation that Lamar will continue to use a prudent mix of debt and equity to finance acquisitions.

If the company can successfully integrate acquisitions and improve utilization rates, positive ratings momentum may be achieved.

If not, leverage could approach levels that warrant a negative outlook.

S&P keeps EchoStar on watch

Standard & Poor's said EchoStar Communications Corp.'s ratings, including the convertibles at B-, remain on positive watch following the termination of the merger with Hughes Electronics Corp.

EchoStar will pay Hughes a $600 million cash breakup fee, but will not be purchasing Hughes' PanAmSat Corp. stake as originally agreed. EchoStar also announced it will repurchase all of Vivendi Universal S.A.'s convertible preferred stock for $1.066 billion.

Even after the sizable cash outlays, S&P believes there is still upward rating potential for EchoStar given a strengthening business and financial profile.

Still, competition in the pay TV business remains intense.

On a trailing 12-month basis, at Sept. 30, EchoStar's EBITDA margin was almost 17%, up from about 12% for 2001. EBITDA to interest is modest, at about 1.65x.

Gross debt to EBITDA is high at about 7.4x. However, EchoStar has more than $2.5 billion in uncommitted cash after paying the $600 million Hughes breakup fee and repurchasing Vivendi's convertible preferred shares. Pro forma for these payments, net debt to EBITDA is roughly 4.1x.

Moody's cuts Verizon

Moody's Investors Service downgraded the senior unsecured long-term debt of Verizon Communiations Inc. to A2 from A1. The outlook was changed to stable from negative.

The downgrade reflects concerns about rapidly expanding competition and technology substitution eroding the strong free cash flow generating capacity of traditional wireline operations, Verizon Wireless and cash flow relative to the still large debt load, Moody's said.

The outlook acknowledges the significant progress in deleveraging and improving liquidity, plans to further reduce debt, the dismissal of the $8.8 billion purchase obligation associated with the NextWave reauction and the expectation that Verizon would fund the Vodafone put in a manner that preserves balance sheet strength.

Fitch affirms Newell Rubbermaid

Fitch Ratings rated Newell Rubbermaid Inc.'s $250 million 4.625% 7-year senior unsecured note offering at BBB+ and affirmed other ratings, including the convertible preferreds at BBB.

The outlook is stable.

S&P cuts ABB to junk

Standard & Poor's downgraded ABB to junk and kept it on CreditWatch with negative implications.

Ratings lowered include ABB International Finance Ltd.'s $968 million 4.625% convertible notes due 2007, C$150 million floating-rate notes due 2003, CHF350 million 3.5% notes due 2003, CHF400 million 3% notes due 2004, €77 million 9.625% notes due 2004, €103 million 8.125% notes due 2004, €129 million 10% notes due 2003, €300 million 3.5% notes due 2003, €300 million 5.375% notes due 2005, €475 million 5.125% notes due 2006, €500 million 5.25% notes due 2004, €500 million 9.5% notes due 2008, £200 million 10% bonds due 2009, ¥50 billion notes due 2005, $150 million 2.75% convertible bonds due 2004, $250 million 7% bonds series 93 due 2003, ABB Finance Inc.'s $250 million 6.75% notes due 2004, ABB Capital (USA) LLC's $350 million floating-rate extendible liquidity securities due 2006 and ABB Capital BV's €49.58 million 4% bonds due 2003, all cut to BB+ from BBB-.

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