Fitch assigns A+ rating to Radian's new convertible

Fitch on Monday assigned an A+ rating to Radian Group Inc.'s $200 million senior convertible debenture issue. The rating outlook is stable. The rating reflects Radian's strong competitive positioning within the private mortgage insurance marketplace, business diversification, moderate financial leverage and strong fixed charge coverage. Pro-forma debt and preferred stock to capital is expected to increase moderately to 21%, including the effect of the issue's $20 million over-allotment option, Fitch said.

Moody's rates Radian's new convertible at A2

Moody's Investors Service on Monday assigned an A2 rating to the proposed issuance of $200 million senior convertible debt of Radian Group Inc., the holding company for Radian Guaranty Inc., Amerin Guaranty Corp. and Enhance Financial Services Group Inc. - the holding company for Radian Reinsurance Inc., formerly Enhance Reinsurance Co. Radian Asset Assurance Inc. (formerly Asset Guaranty Insurance Co.), as well as 46% interests in Sherman Financial Group and C-BASS. The rating outlook is stable.

Moody's noted that the A2 debt rating reflects substantial diversification of Radian Group's revenue streams since its acquisition of Enhance Financial Services Group, and its utilization of its subsidiaries for broadening its synergistic credit enhancement lines of business. The subsidiary companies of Radian Group benefit from the ability to innovate by utilizing a broad array of expertise and resources to compete more effectively in the business of credit enhancement, Moody's said. However, offsetting these positives is Radian Group's continued aggressive pursuit of growth avenues through product development and acquisition. Moody's remains concerned about the potential for the company to enter into other businesses, which are substantially more risky. The stable outlook is based on Moody's expectation that Radian Group will not increase its leverage substantially from current levels, and that it will maintain sufficient debt coverage ratios and manage its capital in a more conservative manner going forward. In addition, risk management, particularly of its non-synergistic subsidiaries, a decreased risk appetite, and effective management of its recent acquisitions is important to the company's rating.

The financial strength ratings for Radian Guaranty Inc. and Amerin Guaranty are Aa3.

Fitch rates Xerox new notes at BB

Fitch on Monday assigned a BB rating to Xerox Corp.'s proposed $500 million senior unsecured 144A notes issuance due 2009. Fitch said it recognizes the company's improved liquidity, progress made in asset dispositions and its $1 billion cost cutting program, its strong technologically competitive product line and business position, its continued effort to improve working capital management and the commitment to continue its cost cutting program beyond the initial $1 billion. The ratings also consider the company's strained credit protection measures, refinancing risk of its $7 billion revolver due October 2002, the ongoing Securities and Exchange Commission investigation into Xerox's Mexican accounting issues and other accounting matters, and overall weaker economic conditions. Although the company's financial flexibility has improved with forecasted flat to down revenues, it is crucial that Xerox executes its cost cutting programs in order to return the core operations to profitability. Fitch notes, also, that Xerox has made significant progress with its turnaround strategy. Asset sales have totaled more than $2.0 billion, including an agreement to outsource approximately half of its manufacturing, the common stock dividend has been eliminated, and the company exited the ink-jet market, which was a significant cash drain.

Moody's rates new Charter notes at B2

Moody's Investors Service on Monday assigned B2 ratings to the proposed new multi-tranche series of senior unsecured notes ($600 million estimated proceeds) to be issued by Charter Communications Holdings LLC and Ba3 ratings to the new senior secured bank credit facilities of subsidiaries Charter Communications Operating LLC (replacement revolver and term loan A totaling $1.34 billion and $1.11 billion, respectively, an increase of $90 million and $110 million respectively). Moody's also confirmed all of the existing ratings for Charter and its subsidiaries, saying the rating outlook remains stable.

The ratings reflect the company's very high financial leverage and low interest coverage; expectations of continued capital consumption as significant expenditures are made through 2002 and into 2003 to complete the company's network upgrade; uncertainty about the potentially adverse impact on the company's operations and tempered cash flow growth expectations given a prolonged economic downturn and a heightened competitive environment; and concerns about the prospect of renewed consolidation in the sector, Moody's said. However, the ratings continue to draw support from the implicit value of the company's large asset base; the increasingly technologically advanced and substantially upgraded network following significant capital investment over the last couple of years; expectations of meaningful cash flow growth over the ensuing rating horizon; and good liquidity and access to the capital markets, as well as some implicit support from the equity sponsorship of Paul Allen, Moody's added.

The stable outlook reflects the balance of the uncertain economic environment and the likelihood of increased competition against expectations about the performance of new services and management's execution of its business strategy, Moody's said.. Of primary concern to Moody's is the continued performance of the new services roll-out in light of the recessionary economic environment.

Moody's put Georgia-Pacific on review for possible downgrade

Moody's Investors Service placed Georgia-Pacific Corp.'s Baa3 senior unsecured debt ratings and Prime-3 short term rating for commercial paper under review for possible downgrade. The ratings review is based on our expectation that weakness in the company's packaging, building materials and paper businesses will continue over the near term, stressing debt protection measurements and inhibiting a planned reduction in debt. In addition, the ratings review reflects uncertainty about the size, scope and ability to complete currently contemplated asset sales and longer term uncertainty surrounding the company's asbestos liability.

Georgia-Pacific's debt increased significantly (to around $16 billion) with the acquisition of Fort James in late 2000. The company's existing ratings have anticipated that the company would use a combination of cash from operations and asset sales to reduce debt to at or below $9.5 billion by mid to late 2003, restoring debt protection measurements to levels consistent with the ratings. While the company has been successful at reducing debt with asset sales and cash from operations thus far (total debt at around $12.4 billion at the end of the year), further debt reduction may prove much more difficult over the near term. Cash from operations is lower than previously anticipated, reflecting the weakness is paper, packaging and building products markets, and asset sales for non-core business may become much more difficult. Absent a significant asset sale, debt may remain well above the company's targeted level through 2003, Moody's said.

The company has acknowledged that it is in negotiations to sell all or a portion of its building products business to Willamette (A3), and proceeds from the sale of this business would be substantial. While we recognize that Georgia-Pacific might obtain debt relief from the sale of assets to Willamette, we believe the timing and amounts associated with such a sale are highly uncertain at this point, Moody's said. The company has had some difficulty meeting the terms of its bank agreements, the rating agency added, and obtained an amendment to financial covenants in December 2001. While the revised terms of the bank agreements should provide adequate flexibility through 2002, there is some concern that liquidity may become more of an issue over the intermediate term. Moody's said the review will assess the outlook for the company's core businesses, the ability to reduce leverage with cashflow over the near term, the prospects for additional asset sales that can be used to reduce leverage, a revised debt target related to asset divestitures, and the ability to manage asbestos liability over the long term review will assess the outlook for the company's core businesses, the ability to reduce leverage with cashflow over the near term, the prospects for additional asset sales that can be used to reduce leverage, a revised debt target related to asset divestitures, and the ability to manage asbestos liability over the long term.

Fitch establishes rates for TXU Electric successors

Fitch on Monday established the following ratings for successors to TXU Electric Co: TXU U.S Holdings Co. (formerly TXU Electric) $20 million of senior unsecured debt affirmed at BBB+ and $136 million of preferred stock upgraded to BBB+; TXU Electric Delivery Co. (TXU Delivery) $2.5 billion first mortgage bonds rated A-, implied senior unsecured debt BBB+; TXU Energy Co. LLC (TXU Energy) $3.6 billion senior unsecured bonds at BBB+. The rating outlooks are stable. Fitch also affirmed TXU Corp.'s senior notes at BBB, preference stock at BBB- and commercial paper at F2.. TXU Corp.'s rating outlook is stable.

Fitch rates Williams convertible at BBB

Fitch on Monday assigned a BBB rating to The Williams Cos. Inc.'s expected offering of approximately $1 billion of FELINE PACS, or mandatory convertibles. Fitch views the FELINE PACS as providing significant equity-like flexibility to Williams' capital base primarily due to the secured commitment from the investors for the forward purchase of common stock at a fixed exchange ratio incorporating a floor equity price set at closing. Given this structure, the ultimate return to investors will depend on the value of the Williams common stock at the contract settlement date (Feb. 16, 2005). Fitch's stressed the rating does not comment on the expected performance of the common equity of Williams.

Williams' outstanding ratings were affirmed in December following Fitch's assessment of a series of initiatives to be taken by the company to enhance its balance sheet and liquidity profile in light of the more difficult and volatile capital market environment currently plaguing the energy merchant sector. Specifics of the plan include a $1 billion issuance of mandatory convertible securities in early 2002, a $1 billion reduction in 2002 capital spending and potential non-core asset sales of $250 million to $750 million. Fitch said it believes that the proposed FELINE PACS issuance adequately fulfills management's pledge to mandatory convertible securities.

Moody's upgrades Express Scripts

Moody's Investors Service on Monday upgraded its ratings of Express Scripts Inc.'s senior implied and senior unsecured issuer ratings to Ba1 from Ba2, among other ratings upgrades. Moody's said the upgrade follows the company's strong operating performance and significant reduction in leverage in recent years as well as the expectation that acquisition activity over the near to intermediate term will not include anything of significant magnitude. The rating outlook is stable, Moody's said, reflecting the rating agency's belief that cash flow and operating performance will continue to be strong for the company, and that the cross-selling of more profitable services will continue to offset pricing issues. However, the outlook also incorporates a potential impact on credit statistics over the short to intermediate term as a result of moderate acquisition activities. If the company's operations and cash flow continue to grow to a point where the company's credit metrics can accommodate material acquisitions and yet remain strong, Moody's may consider a positive rating action. Conversely, should acquisition activities, combined with weakening company fundamentals most likely to result from pricing pressure and an inability to grow lives due to competitive pressures, lead to a significant drop in debt protection metrics, Moody's may consider a negative rating or outlook change.

S&P rates new Williams convertibles BBB

Standard & Poor's assigned a BBB rating to The Williams Cos. Inc.'s planned offering of $1 billion of feline PACS due 2007.

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