Moody's raises Ansell outlook

Moody's Investors Service raised its outlook on Ansell Ltd. to stable from negative. The company's senior debt is rated Ba2.

Moody's said the outlook change is driven by increased certainty about Ansell's business environment combined with a strengthening in the firm's financial risk profile.

Ansell's rating reflects: solid brand awareness and long-term relationships with customers underpinning revenues and operating margins; the ability to meet evolving needs of customers with introduction of new products; expected cost savings from relocation of manufacturing base; and ring fencing of the SPT venture with four year 'put option" (but dependence on Goodyear).

Moody's noted the rating also considers the fragmented nature of markets, which restricts Ansell's pricing power and ability to grow revenue; lack of business size and narrow product diversity; and exposure to currency (primarily euro) and commodity (latex) price risk.

Ansell has now emerged in its own right from the old Pacific Dunlop Group with a clearer business profile and strategy, which provides some certainty as to form of business and underlying revenues and cash flows, Moody's said.

Fitch rates Big Food notes B

Fitch Ratings began coverage of Big Food Group plc based on public information and assigned a B rating to the company's £150 million 9.75% senior subordinated notes due 2012. The outlook is stable.

Fitch said the ratings reflect Big Food's market position as the U.K.'s leading integrated food provider, incorporating both the strong market position of Booker (acquired in June 2000) in the consolidated U.K. grocery wholesale market, as well as Iceland's position as the second largest player in the frozen food retailing segment.

Although the majority of Booker sales have been generated historically from the long-term declining cash & carry segment, the group is gradually focusing its wholesale strategy on delivered wholesaling by growing its Premier symbol group which should allow Booker to attract independent retailers as captive customers on an ongoing basis, Fitch noted. In addition, management plans to enhance its market position in the wholesale segment by supplying the value-added growing independent catering business.

Fitch believes that the wholesale business will continue to be the largest contributor to both consolidated revenues and profits going forward, with the recent poor group margin development caused principally by the problems experienced at Iceland. Whilst the wholesale business has inherently lower operating margins than the retail business, notwithstanding Iceland's recent problems, Fitch recognizes that these are heavily influenced by the large proportion of tobacco revenues within total divisional sales.

Notwithstanding its cash generative profile as a food retailer, Iceland is exposed to the highly competitive U.K. retail market, Fitch said. In March 2002, the new management team unveiled a three-year plan to turn around the retail operations through a store segmentation program, including a broader-based convenience store format, which evidenced a positive outcome for the initial 62 re-formatted stores up to June 2003. Fitch believes that the initial positive results of the program need to be assessed across a larger universe of stores and over a longer period of time in order to establish whether the improvements can be maintained while enabling the group to generate sufficient cash flows to meet investment and debt service obligations in the medium to longer term.

Fitch said it gains some comfort from the favorable debt refinancing closed in June 2002, which had a positive impact upon the fixed charge coverage ratio and lengthened the group's debt profile. Big Food maintains substantial off-balance sheet operating lease obligations. Using lease-adjusted ratios, the group's leverage of 4.1x at year-end 2003 is consistent with the rating category. However, the adjusted interest cover ratio of 2.1x, as measured by EBITDAR/interests+ rents, is relatively weak for the category.

S&P rates Gazprom notes program B+

Standard & Poor's assigned a B+ rating to OAO Gazprom's $5 billion senior unsecured loan participation note program to be issued via Gaz Capital SA. Gazprom is rated B+ with a positive outlook.

S&P said the note rating mirror's its assessment of Gazprom which, in turn, takes into account the company's role as the owner and operator of essentially all exploration, production, processing, transportation and export assets in Russia's natural-gas sector, as well as its privileged position as a supplier to the large and growing Western European natural-gas market.

Gazprom's rating remains constrained by the continued strongly adverse pricing regime in Russia, as well as by the company's high financial leverage and short-term debt, dependence on Ukraine for access to export markets and expected major capital-expenditure requirements to maintain production and the export-pipeline infrastructure.

S&P cuts Vendex to junk

Standard & Poor's downgraded Koninklijke Vendex KBB to junk including cutting its corporate credit rating to BB+ from BBB-. The outlook is stable.

S&P said the action follows a further weakening of the group's business profile.

S&P said Vendex's financial profile, which should remain broadly flat in the coming years, is no longer commensurate with an investment-grade rating.

Vendex's operational performance declined in the first half of financial 2004, primarily as a result of higher losses at its Vroom & Dreesmann department store chain.

Vroom & Dreesmann's continued underperformance - despite the revitalization program launched last year, which resulted in an exceptional €48 million charge in the first half of 2003 - reflects deep-rooted internal issues, in particular its high operational gearing.

Vendex is now taking radical actions at Vroom & Dreesmann, including the closure of at least 12 and possibly up to 24 stores and a 20% reduction in headcount. This will result in an essentially €80 million-€100 million cash restructuring provision to be taken in the second half of financial 2004, which will be disbursed in financial 2005.

This restructuring cash outflow could be offset by a combination of lower capital expenditures (€50 million-€55 million) and a reduction in dividend payouts next year, S&P said.

S&P confirms Schuff, off watch

Standard & Poor's confirmed Schuff International Inc. including its $100 million 10.5% senior notes due 2008 at B-, removed it from CreditWatch negative and assigned a negative outlook.

S&P said the confirmation follows Schuff's recent 8-K filing announcing that it has obtained a new three-year bank credit facility. The bank facility's $15 million borrowing capacity, along with $9 million of unrestricted cash (at June 30, 2003), should provide Schuff with enough liquidity to meet its near-term needs.

S&P said Schuff's ratings reflect its nominal liquidity, very aggressive financial profile and its well below average business position as a construction firm competing in very challenging markets.

Although near-term liquidity concerns have been somewhat tempered by the recent bank agreement, should business conditions in the commercial and industrial construction markets that Schuff competes in remain depressed for a protracted period, or should surety requirements become more restrictive, the firm's ability to meet its financial obligations in 2004 could be impaired further, S&P cautioned.

Total debt to EBITDA at June 30, 2003, was 9x, and EBITDA to interest coverage was about 1x, and they are unlikely to improve meaningfully in the near term, S&P said.

S&P upgrades Chevy Chase Bank, B.F. Saul

Standard & Poor's upgraded Chevy Chase Bank, FSB including raising its $100 million 9.25% subordinated debentures due 2008 and $150 million 9.25% subordinated debentures due 2005 to BB- from B+ and Chevy Chase Preferred Capital Corp.'s $150 million non-cumulative exchangeable preferred stock to B+ from B. S&P also raised parent company B.F Saul Real Estate Investment Trust's $200 million 9.75% senior secured notes due 2008 to B from B-. The outlook is stable.

S&P said the upgrade is the result of a decreased risk profile in Chevy Chase's loan portfolio, improved funding and acceptable profitability given the current rating level.

Chevy Chase's loan portfolio is now more than 60% residential mortgages and home equity loans. Indirect auto loans and leases, which had comprised a significant component of the loan book, are no longer being originated and have begun to decline as a proportion of total loans. Asset quality metrics have shown steady improvement as well.

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