S&P rates CenterPoint convert BBB-

Standard & Poor's assigned a BBB- rating to CenterPoint Energy Inc.'s $500 million senior unsecured convertible notes due 2023. The outlook is stable.

Proceeds from the issuance will be used to repay a portion of its outstanding $3.8 billion credit facility. Under the terms of the credit facility, CenterPoint provided warrants to lenders for up to 10% of its common stock, as an incentive for the company to access the capital markets in order to reduce the size of the facility. As a result of this transaction, 61% of those warrants will be released.

Also, CenterPoint will have fulfilled a requirement under the credit facility to reduce it by at least $400 million, of which $200 million is from the issuance of equity or equity-linked securities, allowing a limitation on dividends that begins in 2004 to be extinguished.

CenterPoint has a low business risk profile with a very supportive regulatory environment, lack of an electricity supply function/commodity risk and moderate growth in its service territory. These factors are mitigated by volume volatility due to weather. Gas operations are diversified and purchased gas adjustment clauses mitigate commodity risk.

Consolidated debt will remain high until 2004/2005. Also, CenterPoint has incurred high financing costs resulting from a confluence of events - the delayed spin-off of Reliant Resources Inc., material refinancings and the sharp contraction in liquidity in the capital and bank markets.

Revised terms of the $3.80 billion bank loan have substantially enhanced CenterPoint's ability to efficiently access the capital markets by providing financial stability during the transition period to 2005, by which time it expects to recover its investment in generating assets and return to a more typical debt level for a regulated utility, S&P said.

S&P believes that CenterPoint has sufficient liquidity to meet its consolidated working capital needs.

S&P rates new LSI convertible at B

Standard & Poor's assigned a B rating to LSI Logic Corp.'s new $350 million of 4% convertible subordinated notes due 2010, and affirmed its other ratings. The outlook is stable.

Ratings reflect a good niche semiconductor position, offset by reliance on a limited customer base.

Although EBITDA margins exceeded 25% at the peak of the cycle, margins were 6% in the March quarter. Cost-reduction actions taken earlier this year are expected to support positive net income on quarterly sales of $500 million later this year.

Pro forma debt and capitalized leases were $1.8 billion at March 31.

Financial flexibility remains ample for the rating, with pro forma cash balances of $1.3 billion at March 31. LSI has refinanced operating leases and leased some formerly owned assets, also contributing to financial flexibility, S&P said.

The company does not have a revolving credit agreement, but generated more than $100 million in free cash flow in 2002.

LSI's moderate financial practices and strong customer relationships provide a good degree of downside protection for the rating. Profitability pressures and ongoing marketplace volatility are likely to constrain upside potential intermediately.

Moody's ups Bunge outlook

Moody's Investors Service raised the outlook on Bunge Ltd. and subsidiary ratings to positive from stable, reflecting improvement in global market position and operating performance.

The outlook change also reflects the relatively smooth integration thus far of Cereol SA, which was acquired in October 2002, progress in strengthening financial flexibility, diversifying funding sources and lengthening debt maturities over the past two years.

Moody's confirmed the Baa3 senior unsecured ratings for Bunge Ltd. Finance Corp., as well as the Baa3 rating for Bunge Master Trust, based on the full unconditional guarantee from Bunge Ltd., and assigned a Baa3 rating to the new $200 million senior unsecured bond of Bunge Ltd. Finance Corp.

Leverage increased following the Cereol acquisition but remains consistent with a Baa3 credit, Moody's said.

At Dec. 31, consolidated gross debt was $3.4 billion, compared to $1.8 billion a year before. Retained cash flow fell to about 20% of debt.

Moody's noted that several publicly announced asset sales during 2003 will help further reduce debt.

S&P revises Xcel watch to positive

Standard & Poor's revised its watch for the long-term ratings on Xcel Energy Inc. (BBB) and its regulated utility subsidiaries to positive from developing.

Also, S&P raised the short-term corporate credit and commercial paper ratings to A-2 from A-3 and removed them from CreditWatch.

A significant number of creditors of subsidiary NRG Energy Inc. have signed the settlement agreement and additional signatures are expected promptly. Therefore, Xcel Energy is no longer in danger of being pulled into the bankruptcy of NRG.

NRG can now file a voluntary, prepackaged bankruptcy that limits Xcel's obligation to NRG creditors to $752 million - $350 million payable in late 2003, $50 million in early 2004 and $352 million around April 2004 when Xcel receives the tax refund associated with the writedown for NRG.

When the bankruptcy plan is filed, NRG will become the property of it creditors and will no longer be a subsidiary of Xcel. As a result, Xcel will be a utility holding company with minimal nonregulated operations.

Moody's cuts Hartford, rates new convert A3

Moody's Investors Service downgraded the ratings of The Hartford Financial Services Group Inc. and Hartford Life Inc., and assigned an A3 rating to its proposed $600 million mandatory convertible and $250 million senior notes.

Senior ratings were cut to A3 from A2 and short-term commercial paper ratings to P-2 from P-1.

The downgrades follow Hartford's announcement of a $1.7 billion net after-tax asbestos charge.

It also incorporates the expectation that Hartford will successfully complete its capital-raising plans, but if that does not proceed as planned the ratings would be subject to further downgrade.

Expanding on its rationale for downgrade of the debt ratings, Moody's noted financial leverage is high. While Moody's views the proposed capital market transactions favorably given the substantial equity content, it will also increase the amount of on-going funding needed by the parent to meet increased fixed charges and common stock dividends.

The outlook on all of the ratings, except for the commercial paper, is negative.

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