S&P says no change in AT&T Canada

Standard & Poor's said it is making no change to AT&T Canada's rating following a Cabinet reshuffle that included the resignation of Canadian industry ministry Brian Tobin.

With the appointment of Allan Rock to the post, the timing of any relaxation in foreign ownership rules remain uncertain, S&P said. But John Manley's appointment as deputy prime minister somewhat offsets that uncertainty since in his time as industry minister Manley "oversaw numerous changes that were highly supportive of a more balanced, competitive telecommunications environment in Canada," S&P added.

S&P rates AT&T Canada BBB on CreditWatch with developing implications.

"The ratings on AT&T Canada are underscored by AT&T Corp.'s explicit commitment to the financial and strategic importance of AT&T Canada to its overall North American business strategy," S&P added. "AT&T Corp.'s credit profile, commitment to the shareholder agreement, and competitive advantage in the provisioning of global connectivity to multinational customers remain key to the ratings on AT&T Canada."

Moody's rates new Constellation Brands new notes Ba3

Moody's Investors Service assigned a Ba3 rating to Constellation Brands' new $200 million of senior subordinated notes due 2012 and confirmed the company's existing ratings, including its $200 million 8.5% senior subordinated notes due 2009 at Ba3 and its $200 million 8% senior unsecured notes due 2008, $200 million 8.625% senior unsecured notes due 2006, £75 million 8.5% senior unsecured notes due 2009 and its £80 million 8.5% senior unsecured notes due 2009 at Ba2. The outlook is negative.

Moody's said its ratings reflect Constellation's "moderate financial risk profile and its acquisitive growth strategy" primarily financed by debt.

The rating agency noted Constellation has achieved incremental improvements in operating margin and EBITA return on assets in fiscal 2001 but continues to have high leverage and moderate coverage of interest expense for its ratings level.

Constellation has good liquidity and ample headroom under its bank covenants, Moody's added.

The negative outlook reflects Constellation's highly acquisitive strategy.

S&P rates new Constellation notes B+

Standard & Poor's rated Constellation Brands Inc.'s new offering of $200 million senior subordinated notes due 2012 at B+ and confirmed the company's existing ratings including its senior unsecured debt at BB. The outlook remains negative.

S&P said its ratings reflect Constellation's "strong cash generation from a diverse portfolio of beverage alcohol products, offset, in part, by the competitive nature of the company's markets and its leveraged financial profile resulting from its acquisitive growth strategy."

The rating agency noted Constellation made more than $1.4 billion of mostly debt financed acquisitions between November 1998 and April 2001.

The acquisitions broadened its business lines and products as well as significantly increasing Constellation's international revenue base, S&P said. But the "substantial increase in debt has pressured the company's credit measures, which remain below average for the rating."

Moody's rates new TSI Telecommunications notes B3

Moody's Investors Service assigned a B3 rating to TSI Telecommunications Services Inc.'s new offering of $245 million of senior subordinated notes due 2012 and a Ba3 rating to its $335 million senior secured credit facilities. The outlook is stable.

Moody's said the rating reflects TSI's "solid position as a service provider primarily to wireless carriers in the US, its good operating track record, and the prospects for continued growth as TSI further penetrates existing accounts and wins business from new customers."

But the rating agency noted TSI has high leverage and faces risks from being associated with the rapidly evolving telecommunications industry and competitive pressures.

S&P keeps AMR on negative watch

Standard & Poor's said it kept AMR Corp. and its America Airlines Inc. unit on CreditWatch with negative implications after AMR reported, as expected, a "substantial" fourth quarter net loss of $734 million before federal cash grants and other special items, $798 million including those items.

AMR is rated BB by S&P.

The rating agency noted that AMR, like other U.S. airlines, is seeing revenue generation gradually improve from its post-Sept. 11 low point.

In December the average daily operating loss was $6 million compared to an average of $8.5 million to $9 million during the fourth quarter.

S&P described AMR's liquidity as "satisfactory, with a year-end cash balance of $3 billion, an undrawn, recently arranged $1 billion bank line, and $6 billion of unsecured aircraft."

S&P keeps Northwest on negative watch

Standard & Poor's said it kept Northwest Airlines Corp. and its Northwest Airlines Inc. unit on CreditWatch with negative implications after Northwest reported a fourth quarter net loss of $256 million before federal cash grants and other special items, $216 million including those items.

AMR is rated BB by S&P. The rating agency said it expects to resolve the review "fairly soon."

S&P described Northwest's fourth quarter and full year performance as better than average among large U.S. airlines "in a very difficult industry environment."

The rating agency noted that Northwest, like other U.S. airlines, is seeing revenue gradually improve from its post-Sept. 11 low point and Northwest has aggressively cut costs.

S&P described Northwest's liquidity as "good, with $2.6 billion of cash at Dec. 31, 2001, and covenant amendments in place on the company's bank revolving credit agreement."

Moody's lowers Flag

Moody's Investors Service downgraded Flag Telecom Holdings Ltd. and Flag Ltd. Ratings affected include Flag Telecom's €300 million 11.625% global senior notes due March 2010 and $300 million 11.625% global senior notes due March 2010, both cut to Ca from B2, and Flag Ltd.'s senior secured loan facility, cut to B3 from Ba2, and its $430 million 8.25% senior notes due 2008, cut to Caa3 from Ba3.

Moody's said it cut the ratings because of heightened concern that Flag's "fundamental business model may be increasingly pressured by protracted softness in global telecom spending and our view that Flag's liquidity position will become increasingly pressured over the near term."

Scaled-back carrier spending plans and heightened pricing pressure could further stall the rise in Flag's revenue, Moody's said.

Flag has estimated capital expenditures of $800 to $850 million and interest expense of $135 million through the end of 2002. To support this, at the end of September 2001 Flag had cash on hand including restricted cash of $668 million, $410 million available under its operating subsidiary credit facilities, plus anticipated receipts of $150 million from LEVEL 3/Reach.

With those figures, Flag's liquidity "will be severely pressured by year end 2002 unless recurring EBITDA is revitalized," Moody's said.

Fitch withdraws Crown Castle ratings

Fitch withdrew its public ratings on Crown Castle International Corp.

The rating agency said it could not maintain the assessment due to lack of management contact and adequate information.

Fitch had rated Crown Castle's senior secured credit facilities at BB-, its senior notes and senior discount notes at B and its preferred stock and senior exchangeable preferred stock at CCC+.

S&P downgrades National Steel, on negative watch

Standard & Poor's downgraded National Steel Corp. and put its ratings on CreditWatch with negative implications. The company had previously had a negative outlook.

Ratings affected include National Steel's $116 million 8.375% first mortgage bonds due 2006 and $175 million 9.875% first mortgage bonds series A due 2009, both lowered to CCC+ from B-.

S&P puts U.S. Steel on negative watch

Standard & Poor's put its ratings for United States Steel Corp. on CreditWatch with negative implications. It had previously had a negative outlook.

Ratings affected include United States Steel LLC's $535 million 10.75% senior unsecured notes due 2008 and $49 million 10% senior quarterly income debt securities notes due 2031, both rated BB.

S&P downgrades Ziff Davis, still on watch

Standard & Poor's downgraded Ziff Davis Media Inc. and kept the company on CreditWatch with negative implications.

Ratings affected include Ziff Davis Media's $50 million revolving credit facility due 2006, its $100 million term loan A due 2006 and its $230 million term loan B due 2007, all lowered to CCC- from CCC, and its $250 million 12% subordinated notes due 2010, lowered to C from CC.

S&P upgrades two Korean banks, positive outlook on third

Standard & Poor's upgraded Korea Exchange Bank and Kookmin Bank and raised the outlook of a third, Chohung Bank, to positive from stable.

Ratings affected include Korea Exchange Bank's $200 million 13.75% upper tier II subordinated notes due 2010, raised to B from B-; Kookmin Bank's $2 billion medium-term note program, with the senior unsecured issuance raised to BBB- from BB+ and subordinated issuance raised to BB+ from BB-, its $200 million 6.0637% subordinated notes due 2006, raised to BB+ from BB-, and its SGD100 million bonds due 2003, raised to BBB- from BB+; Chohung Bank's $200 million adjustable-rate lower & upper tier II subordinated notes due 2010, rated B+/B from B+/B, were put on positive outlook.

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