S&P rates Arris convert B-

Standard & Poor's assigned a B- rating to Arris Group Inc.'s new $100 million convertible subordinated notes.

Ratings on Arris Group reflect heavy dependence on capital spending by cable system operators, significant customer concentration and a competitive business environment, S&P said.

These concerns are partially offset by industry trends favoring broadband deployment and Arris' position as a leading developer, manufacturer and supplier of cable telephony, high-speed data services, and optical transport equipment.

While Cox's deployments have continued and will offset reductions elsewhere, Arris' growth will ultimately depend on the resumption of activity by Comcast and major multiple service operators.

Based on assumed funded debt of $125 million and EBITDA of $32 million for 2003, reflecting annualized December quarter performance, total debt-to-EBITDA of 4x is in line with the rating level.

Following the transaction, Arris' cash balances are expected to remain at around $98 million and access to its $115 million asset-based revolving credit line will amount to about $50 million, S&P said.

Funded debt is expected to be $100 million-$125 million, based on the final issue size of the new note offering. In addition to balance sheet liquidity, Arris generated $8 million of EBITDA in the December quarter.

Expectations are for flat performance in the March quarter and for some improvements during the remainder of 2003. Capital expenditure was about $8 million in 2002.

The outlook is negative, reflecting the uncertain operating environment and the possibility that profitability pressure could lead to a lower rating, S&P added.

Moody's rates Simon notes Baa2

Moody's Investors Service assigned a Baa2 rating to Simon Property Group LP's new $600 million offering of 10-year and seven-year senior unsecured notes. The outlook is stable.

Simon Property's ratings continue to incorporate the REIT's firm leadership and strong overall competitive position in the regional mall property sector and high quality property portfolio, counterbalanced by high levels of secured debt and aggressive pursuit of acquisition opportunities.

Fitch rates Comcast notes BBB

Fitch Ratings assigned a BBB rating to Comcast Corp's offering of $750 million 5.5% senior unsecured notes due 2011 and $750 million 7.05% senior unsecured notes due 2033. The outlook is stable

The ratings incorporate leading market positions, consistent operating performance and economies of scale which should provide bargaining. Also, Fitch said it believes Comcast is ahead of schedule in its integration of the AT&T Broadband properties.

Another important consideration is the execution of deleveraging plans. Successful assets sales and the spin-off of Time Warner Entertainment should reduce debt to about $25-$26 billion for leverage at yearend 2003 below 4x and interest coverage in excess of 3.0x, which reflects a solid BBB company.

Primary rating concerns include risks associated with the integration of AT&T Broadband and the timing of the TWC spinoff, as well as ongoing competitive threats from direct broadcast satellite providers, Fitch said.

Further, the announcement that Liberty triggered the exit process as it relates to Comcast's and Liberty's interests in QVC could have ratings implications.

S&P rates new Interpublic convert BB+, off watch

Standard & Poor's assigned a BB+ rating to The Interpublic Group of Cos. Inc.'s new $700 million 4.5% convertible senior notes due 2023 and removed the company from CreditWatch with negative implications, noting the refinancing mitigates the risk related to the potential Dec. 14, 2003, cash put for its 0% convertible senior note issue due 2021. The outlook is negative.

Ratings reflect recent weak profitability, operating challenges in an uncertain economic climate and the likelihood that restoring earnings prospects and improving key credit ratios could be somewhat delayed.

Margins and cash flow growth are expected to remain under pressure near term while Interpublic works to turn around its operating performance in a weak economic environment. The company must re-establish positive operating trends before stable outlook would be considered, S&P said.

S&P cuts TDC

Standard & Poor's downgraded TDC A/S including cutting its €750 million 6.5% bonds series 16 due 2012 and ¥3 billion 1.28% exchangeable notes series 14 due 2008 to BBB+ from A-. The outlook is stable.

S&P said the downgrade follows TDC's revision of its guidance and outlook for 2003, which reflects a deterioration beyond previous expectations of the group's core domestic landline operation and reduces its ability to return to credit metrics consistent with an A- rating over the medium term.

TDC's domestic landline operation is being affected by fierce competition, tough regulation, fixed-to-mobile substitution, and a poor economic environment, which, together, have resulted in very substantial earnings erosion, S&P said.

The rating agency is also concerned that the domestic environment could deteriorate further in 2003.

TDC has also incurred substantial debt. Pro forma lease-adjusted net debt to EBITDA was 3.3x (calculated on the basis of equity consolidation of minority stakes) in 2002, which is too high for an A rating, S&P said. TDC was expected to reduce lease-adjusted debt to markedly less than 3.0x EBITDA at the end of 2003 and 2.5x at the end of 2004 while preserving its business risk profile. The revision by TDC of its guidance and outlook for 2003 reflects a deterioration of the group's business risk profile and hampers its deleveraging plans.

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