Moody's downgrades Covanta, still on review

Moody's Investors Service downgraded Covanta Energy Corp. and kept its ratings on review for further downgrade, affecting $260 million of debt. Ratings reduce include Covanta's senior unsecured debt, lowered to B3 from Ba3, and subordinated debt, lowered to Caa1 from B1.

Moody's said it kept Covanta on review pending the company's actions "to obtain sufficient liquidity to maintain ongoing operations and to announce and execute a credible plan to insure its long-term financial viability."

The latest ratings action is because of "heightened concerns stemming from the uncertainty surrounding the company's plans for its ongoing financial operations" since it announced on Dec. 21 it had retained Salomon Smith Barney to assist in pursuing strategic options, Moody's said.

While Covanta "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 commented.

The rating agency added that it believes Covanta has "very little financial flexibility" and limited strategic alternatives considering continued uncertain market conditions in the energy industry.

Moody's confirms Boyd Gaming, negative outlook

Moody's Investors Service confirmed its ratings on Boyd Gaming Corp. and assigned a negative outlook. Ratings confirmed include Boyd's $485 million reducing revolving bank facility due 2003, its $64 million term loan B due 2003 and its $64 million term loan C due 2003, all rated Ba1; its $200 million 9¼% senior notes 2003 and $200 million 9¼% senior notes 2009, both rated Ba3; and its $250 million 9½% senior subordinated notes 2007 at B1.

Moody's said it expects the Sept. 11 tragedy will not have a material impact on Boyd's ability to reduce leverage over the next 12 to 18 months.

Although there was some impact on Boyd's operating cash flow, particularly with respect to the Stardust Las Vegas strip property, improvements at other properties are expected to more than offset these losses, Moody's said.

The rating agency also noted that Boyd's has completed capital investment programs in several markets, which will help limit the capital investment required during fiscal 2002 and 2003. In addition, Moody's expects Boyd's Delta Downs acquisition to begin contributing cash flow in Feb. 2002.

The negative outlook is in response to Boyd's continued high leverage - debt/EBITDA at Sept. 30, 2001 was about 5.5 times - and the delay in opening the Delta Downs Race Track and Casino.

Moody's downgrades Station Casino

Moody's Investors Service downgraded Station Casinos, Inc.'s, affecting $1.4 billion of debt. The outlook is stable. Ratings affected include Station's $400 million of 8.375% senior notes due 2008, lowered to B1 from Ba3; its $150 million of 9.750% senior subordinated notes due 2007, $200 million of 8.875% senior subordinated notes due 2008 and its $375 million of 9.875% senior subordinated notes due 2010 to all lowered to B2 from B1; its $300.8 million senior secured bank credit facility, lowered to Ba2 from Ba1; and its senior implied rating, lowered to Ba3 from Ba2.

Moody's said it lowered Station's ratings because of concerns the company's leverage, measured by debt to EBITDA, will most likely remain above the 4.0 to 4.5 times range over the next two years.

Over the past 12 months, Station's leverage has increased because of weaker-than-expected results for fiscal 2001 results, historical share repurchases and significant acquisition and development capital expenditure, Moody's said.

Station has said it intends to reduce leverage but Moody's said it does not expect the company will be able to manage down to the 4.0 to 4.5 times range by the end of 2003, which it would have to do to maintain a Ba2 senior implied rating.

Moody's downgrades Advanced Glassfiber, outlook negative

Moody's Investors Service downgraded Advanced Glassfiber Yarns LLC and revised the outlook to negative. Ratings affected include Advanced Glassfiber Yarns's $148 million of 9 7/8% senior subordinated notes due 2009, lowered to Caa3 from B2; and its $65 million guaranteed senior secured revolving credit facility due 2004, $64.1 million guaranteed senior secured term loan A due 2004 and $95.4 million guaranteed senior secured term loan B due 2005, all lowered to B3 from Ba3.

Moody's said it lowered Advanced Glassfiber's ratings because of a 29% decline in revenues for the third quarter, "attributable largely to a sizable decrease in sales of glass yarn used in the manufacturing of printed circuit boards." In addition, Moody's said it is concerned about the company's "ability to sustain the confidence of its bank lending group."

Sales for electrical end use declined 73% in third quarter and the electronics market is not likely to materially improve prior to the second half of 2002, Moody's said.

If the fourth quarter is similar to the third, debt to EBITDA would have increased to 5.1 times, more than the 4.75 times fourth quarter debt leverage covenant in the bank credit facility, Moody's calculated.

Without covenant relief, Advanced Glassfiber "could confront a liquidity crisis," Moody's added.

Moody's rates new Pathmark notes B2

Moody's Investors Service assigned a B2 rating to the new issue of $200 million senior subordinated notes from Pathmark Stores, Inc. The outlook is stable. Moody's said this is the first time it has publicly rated Pathmark's post-reorganization debt.

Moody's said its ratings recognize Pathmark's well-established name, market share gains since the September 2000 reorganization, and Moody's belief the supermarket industry is recession resistant.

Also included in Moody's analysis is the potential operating efficiencies resulting from high sales volume per store and Moody's expectation that the company will be able to continue a significant store remodel program while modestly improving leverage.

At the same time, Moody's said its assessment incorporates Pathmark's expected financial leverage, intense competition in the supermarket industry around Philadelphia and New York City, and the exposure to the economic fortunes of a single region. Also limiting ratings is the substantial capital expenditure needed to undo the under-investment of the pre-reorganization period.

S&P rates new Pathmark notes B

Standard & Poor's assigned a B rating to Pathmark Stores Inc.'s new offering of $200 million senior subordinated notes due 2012. The outlook is positive.

S&P said its ratings reflect the highly competitive supermarket industry and Pathmark's continuing need to improve its store base since emerging from bankruptcy in September 2000.

However, S&P noted Pathmark also has a leading market position in the greater New York metropolitan area and stable operating performance.

Moody's confirms Isle of Capri, cuts outlook

Moody's Investors Service confirmed its ratings on Isle of Capri Casinos, Inc. but lowered the outlook to negative from stable, affecting $1 billion of debt. Ratings affected include Isle of $125 million senior secured revolver due 2005, $100 million senior secured term loan A due 2005, $200 million senior secured term loan B due 2006 and $175 million senior secured term loan C due 2007, all rated Ba2, and its $390 million 8.75% senior subordinated notes due 2009 rated B2.

Moody's said it expects the Sept. 11 terrorist attacks will not have a material impact on Isle of Capri's ability to reduce leverage towards its stated debt to EBITDA (earnings before interest, taxation, depreciation and amortization) target of 4.0 times.

While the Sept. 11 attacks did have some modest near-term impact on Isle of Capri's operating cash flow and intense competitive pressures in several markets including Tunica, Miss., Biloxi, Miss., Vicksburg, La. and St. Charles, La. have also pressured operating cash flow, Moody's said EBITDA is still expected to show some improvement going forward. The addition of Boonville, Mo. in Dec. 2001 should also help Isle of Capri's overall operating cash flow trend.

The negative outlook reflects Isle of Capri's leverage, high for the current rating at 5.2 times on Oct. 28, Moody's said. A level of 4.0 to 4.5 times would be more appropriate for the rating, Moody's added.

S&P puts Columbus McKinnon on negative watch

Standard & Poor's put Columbus McKinnon Corp. on CreditWatch with negative implications. Ratings affected include its $199 million in subordinated notes and $225 million bank credit facility.

S&P said it put Columbus McKinnon on watch because of its "weaker-than-anticipated performance and the expectation that continued softness in both industrial and automotive markets will further delay improvements in credit protection measures."

The rating agency also noted the company has limited financial flexibility because it is in violation of bank covenants as of Dec. 31, 2001 and is currently negotiating a new credit facility.

For the nine months to Dec. 31, 2001, Columbus McKinnon reported a 31% drop in operating income to around $51 million compared with around $76 million for the same period in 2000, S&P said.

Cost cutting has been unable to offset the decline in operating income caused by decreased sales volume, S&P noted. As a result, credit protection measures are "very weak" with total debt to EBITDA estimated at 4.6 times and interest coverage at around 2.2 times as of Dec. 31, 2001.

Moody's rates Banco Itau new bond Ba2

Moody's Investors Service assigned a Ba2 rating to Banco Itaś's SA (Cayman Islands) $100 million 6% eurobond maturing Feb. 5, 2004. The outlook is stable.

Moody's said the Ba2 rating incorporates the recent change in its approach to rating foreign currency bonds, allowing the securities of some issuers to pierce their respective country ceilings, in this case Brazil's B1 rating.

The rating agency said its assessment incorporates Banco Itaś's fundamental credit quality and also the risk that the Brazilian government could impose a debt moratorium in the event of default on its own foreign currency obligations. Because the banking system is an arm of government's monetary and foreign exchange policy, Moody's said it believes that, in general, banks may have a lower probability of having their bonds exempted from a moratorium than, say, a major commodity exporter.

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 lowers YPF

Standard & Poor's downgraded YPF SA and changed the foreign currency ratings to CreditWatch with negative implications from CreditWatch with developing implications.

Ratings affected include YPF's $350 million 8% medium-term notes due 2004, $300 million 7.75% notes due 2007, $350 million 7.25% notes due 2003, $100 million 10% medium-term notes due 2028 and $225 million 9.125% medium-term notes due 2009, all lowered to B+ from BB-.

S&P downgrades EOTT, on negative watch

Standard & Poor's downgraded EOTT Energy Finance Corp. and EOTT Energy Partners LP, lowering its $235 million 11% senior notes due 2009 to BB- from BB and putting them on CreditWatch with negative implications.

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