Fitch cuts British Energy, sees new bonds at speculative grade

Fitch Ratings downgraded British Energy plc's existing bonds including its £110 million 5.95% guaranteed bonds originally due in 2003, £163 million 6.08% guaranteed bonds due 2006 and £135 million 6.20% guaranteed bonds due 2016 to D from C and said that new debt to be issued in the company's restructuring will likely be given speculative-grade ratings.

Fitch said the downgrade of the existing bonds to D reflects increased certainty that a restructuring event will occur in respect of the senior unsecured bondholders to a level which would indicate that a default is now the most appropriate rating.

The expected speculative-grade ratings on the new bonds reflects examination of a number of potential future scenarios and a number of potential structures, elements of which may not be valid or applicable for the final restructuring of the group, Fitch said.

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