S&P rates UAL convertibles CCC

Standard & Poor's said it assigned a CCC issue-level rating and 6 recovery rating to UAL Corp.'s $175 million convertible senior notes due 2029 and placed the issue-level rating on CreditWatch with negative implications, where the ratings of UAL and United Air Lines Inc. were placed in July.

The company will use the proceeds from the debt issuance, along with proceeds from the concurrent issuance of 19 million shares, for general corporate purposes.

The agency said the ratings on UAL and United Air Lines reflect participation in the price-competitive, cyclical and capital-intensive airline industry; reduced liquidity due to operating losses and fuel-hedge collateral requirements; and a highly leveraged financial profile.

These weaknesses are somewhat mitigated by United's extensive and well-positioned route system and by reductions in labor costs and financial obligations achieved in bankruptcy reorganization in early 2006, S&P said.

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