S&P affirms Prudential ratings

Standard & Poor's on Wednesday affirmed its ratings on Prudential Financial Inc. and its various subsidiaries, following the company's announcement of the repurchase of up to $1 billion of the company's stock.

S&P said it expects that despite any repurchases of stock, Prudential will maintain financial leverage conservatively below the levels normally associated with the ratings, including an adjusted debt to capital ratio of less than 20%, interest coverage in excess of 9 times and a double leverage ratio less than 125%.

The ratings reflect improved capital, liquidity and earnings positions, S&P said, as well as the company's tactical successes in resolving market conduct issues and selling noncore businesses, favorable scale in virtually all its businesses and strength in franchises in life insurance, asset management and retail securities brokerage. Offsetting positive factors are the challenges Prudential faces in managing in a publicly owned format now that its demutualization has been completed, S&P said. Prudential's risk-based capital ratio, based on S&P's model, is expected to remain in the extremely strong range. S&P said it expects Prudential's earnings to be extremely strong by the end of 2002 and that no material additional liabilities will come to light in connection with market-conduct issues.

Moody's revises Teco Energy outlook to negative

Moody's Investors Service changed the outlooks of the long-term ratings of Teco Energy and Tampa Electric Co. to negative in response to increased financial pressure on the companies resulting from accelerated equity contributions and a higher degree of risk being undertaken by TECO Energy at its two major independent power projects, Union Power and Gila River. These developments have increased the level of uncertainty throughout the organization, Moody's said, noting that the company has responded proactively to this increased financial pressure by trimming its capital expenditure forecast and reevaluating overall growth and expansion plans. Affected are Tampa Electric's Aa3 senior secured, A1 issuer, senior unsecured and pollution control revenue bond debt,Teco Energy's A3 senior unsecured and Baa1 junior subordinated debt and the Baa1 rating of the trust preferred securities of Teco Capital Trust I and Teco Capital Trust II.

Moody's cuts Covanta senior unsecured debt to B3

Moody's Investors Service downgraded Covanta Energy Corp.'s senior unsecured rating to B3 from Ba3 and subordinated rating to Caa1 from B1. Also downgraded to (P)Caa2 from (P)B2 is the rating on the shelf registration for the issuance of preferred stock. The ratings remain under review for possible further downgrade pending the company's immediate actions to obtain sufficient liquidity to maintain ongoing operations and to announce and execute a credible plan to insure its long-term financial viability.

Moody's has taken this action as a result of heightened concerns stemming from the uncertainty surrounding the company's plans for its ongoing financial operations since it announced on December 21, 2001 that it had retained Salomon Smith Barney to assist it in pursuing strategic options. Although the company appears to be exploring various alternatives, there has been very limited information forthcoming, little clarity on what these alternatives might be, or on how the company intends to operate in the coming months and going forward. Moody's believes that Covanta has very little financial flexibility and that there are limited strategic alternatives available to it considering continued uncertain market conditions in the energy industry.

In addition, Moody's is growing increasingly concerned with the company's tight liquidity and its lack of access to the capital markets. These problems have been exacerbated by its inability to sell its remaining entertainment and aviation services assets, continued delays in the collection of outstanding California utility receivables, and its inability to meet cash usage covenants under its bank revolving credit agreement. The banks have agreed to waive these covenants through January 31, 2002 but have declined to provide much needed additional liquidity to the company. If the banks do not agree to continue to waive these covenants beyond the end of January, the resulting default would eliminate a critical source of letter of credit capacity for the company, which will be very difficult to replace. Covanta also has significant convertible debenture maturities in mid-2002 ($85 million in June and $64 million in October) and will likely have difficulty refinancing these issues in the capital markets.

S&P rates new WellPoint Health notes at A-

Standard & Poor's has assigned an A- senior unsecured debt rating to WellPoint Health Networks Inc.'s $350 million of 6.375% notes due January 2012. S&P said the major rating factors were very strong earnings, core market operating companies - Blue Cross of California and BC Life & Health Insurance Co. - maintain excellent brand equity in California, strong consolidated capital adequacy is projected to remain at the 140% level for the year ending 2001 and the company's acquisition strategy is considered aggressive but has been managed well to date. The company's growing level of goodwill and intangibles relative to tangible capital is a concern, S&P added, given the expectation that WellPoint will continue to be a consolidator in the industry. WellPoint's membership in California will drop to under 50% of total membership following the RightChoice merger, S&P noted, but WellPoint has reduced exposure to general business risk and the degree to which it would be unfavorably affected by adverse economic, legislative or regulatory changes in the state.

S&P affirms Tyco on breakup news

Standard & Poor's affirmed its ratings on Tyco International Ltd., Tyco Capital Corp. and units following news of the breakup. The outlooks remain stable. The affirmation of Tyco International Ltd.'s (A/Stable/A-2) ratings reflects the expectation that most debtholders (other than Tyco Capital's) will have the opportunity to be repaid in full via tender offers and other refinancing of existing debt, S&P said. Credit quality is expected to remain strong, S&P said, but added that it is uncertain whether the surviving company will be capitalized conservatively enough to maintain a long-term corporate credit rating of A. Any negative developments related to Tyco International Ltd. while Tyco Capital is majority owned could have a destabilizing effect on the parent, S&P said, which could result in an outlook change or have a negative impact on the ratings of Tyco Capital.

S&P puts Crescent Real Estate on negative watch

Standard & Poor's put Crescent Real Estate Equities Co. and Crescent Real Estate Equities LP on CreditWatch with negative implications. Ratings affected include Crescent Real Estate Equities Co.'s

$200 million 6¾% convertible cumulative preferred stock rated B and Crescent Real Estate Equities LP's $150 million 6 5/8% senior unsecured notes due 2002 and $250 million 7 1/8% senior unsecured notes due 2007, both rated B+.

S&P said its action follows uncertainty after Crescent terminated its agreement to purchase certain assets of Crescent Operating Inc., an unrated, publicly traded company formed by Crescent.

"As a result of this termination, it is uncertain if (Crescent Operating) will be able to continue as a going concern," S&P said.

The rating agency said Crescent is expected to acquire from Crescent Operating resort/hotel lease interests in eight of Crescent's resort/hotel properties and the voting stock of Crescent's residential development corporations either through a prepackaged bankruptcy or through a foreclosure, "which should ultimately support Crescent's simplification efforts."

Crescent's leverage and coverage measures are expected to be "modestly negatively impacted" by the Crescent Operating bankruptcy or foreclosure, S&P said.

The rating agency is also concerned about Crescent management's "fairly aggressive" policy regarding share repurchases. During 2000 it bought back more than $280 million of common stock and $77 million during 2001.

S&P puts American Greeting on negative watch

Standard & Poor's put American Greetings Corp. on CreditWatch with negative implications.

Affected ratings include American Greetings' $300 million 6.1% senior notes due 2028 rated BBB-, its $105 million senior secured 364-day revolving credit facility due 2002, $120 million senior secured revolving credit facility due 2006 and $125 million senior secured term loan B due 2006, all rated BBB-, its $260 million 11.75% senior subordinated notes due 2008, rated BB+ and its $175 million 7% convertible subordinated notes due 2006, also rated BB+.

S&P rates Technip-Coflexip convertibles A-

Standard & Poor's assigned an A- rating to Technip-Coflexip's €690 million 1% callable convertible bonds due 2007.

S&P rates Siliconware convertibles BB-

Standard & Poor's assigned a BB- rating to Siliconware Precision Industries Co. Ltd. issue of $175 million zero coupon convertible bonds due 2007.

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