S&P rates Cathay short-term debt at A-2

Standard & Poor's assigned a BBB+ counterparty credit rating and A-2 short term debt rating to Cathay Financial Holding Co. Ltd. of Taiwan. The outlook on the long term rating is stable.

The ratings reflect the collective and individual credit profiles of the operating subsidiaries, structural subordination of Cathay FHC's claims relative to those of creditors of the operating subsidiaries, likely flow of funds from and to existing and potential operating subsidiaries in relation to Cathay and the developing regulatory environment for financial holding companies in Taiwan.

Cathay is one of the largest financial holding companies in Taiwan in terms of consolidated assets. At the end of 2001, its total assets amounted to new Taiwan dollar (NT$) 1.327 trillion (US$38 billion) and its shareholders' funds stood at NT$93.9 billion (US$2.7 billion).

The stable outlook on the long-term rating takes into account expectations about the future performance of the members of the Cathay FHC group, the group's merger and acquisition strategy, and double leverage at the holding company level. The group's merger and acquisition strategy is expected to focus on the commercial banking sector. Cathay FHC's double leverage is expected to peak at 126% after a proposed bond issue in May or June 2002. However, this level is expected to fall significantly over the subsequent year as funds are upstreamed from Cathay Life.

S&P raises Tower Automotive outlook to stable

Standard & Poor's affirmed the BB corporate credit rating on Tower Automotive Inc., including the 5% convertibles at BB and convertible preferreds at B, and raised the outlook to stable from negative, following Tower's completion of the sale of $222 million of common equity.

Proceeds from the sale were used to reduce borrowings on the company's bank credit facilities, improving Tower's financial flexibility by increasing borrowing availability under the revolver and strengthening its credit statistics, which should permit the company to remain comfortably within its bank financial covenant requirements, S&P said.

The ratings reflect a leading niche position, albeit in a cyclical and highly competitive industry, offset by an aggressive financial profile, the rating agency added.

There was significant deterioration in operating performance during the year. In 2001, the company reported a net loss of $267.5 million, including a restructuring and asset impairment charge of $383.7 million. Benefits from restructuring actions, reduced launch activity and stronger North American production schedules should result in improved performance during 2002.

Tower's recent equity offering improved the company's credit statistics, with total debt to EBITDA declining to 3.0 times from 3.8 times. Only modest further improvement is expected in credit protections measures this year and that will depend to some extent on the market acceptance of several key new platforms.

S&P expects the company's funds from operations to debt, treating the trust preferred securities as equity, to average in the mid-20% area and debt to EBITDA to average about 3.0 times over the course of the business cycle, acceptable levels for the rating.

Fair financial flexibility is provided by adequate access to capital markets and the ability to sell assets.

Tower's leading market positions, good technical capabilities, disciplined growth strategy and commitment to a moderately aggressive capital structure should result in sustained credit quality.

S&P affirms Newell Rubbermaid ratings

Standard & Poor's assigned preliminary BBB+ senior unsecured, BBB subordinated and BBB- preferred stock ratings to Newell Rubbermaid Inc.'s $500 million universal shelf. At the same time, Standard & Poor's affirmed the BBB+ long-term and A-2 short-term corporate credit ratings, including the Newell convertible preferreds at BBB-.

The ratings onreflect a diversified portfolio of consumer products offset by reduced financial flexibility resulting from an aggressive acquisition strategy and weak financial performance.

In 2001, Newell Rubbermaid initiated a restructuring program, which includes a workforce reduction and manufacturing plant consolidation. Also, the company recently acquired the remaining 51% of American Tool Cos. Inc.

Management will be challenged to integrate American Tool's operations as it completes the restructuring program.

Still, key credit measures, adjusted for operating leases and restructuring charges, proforma for the acquisition are expected to be appropriate for the rating. S&P anticipates pretax interest coverage to be about 5 times, with funds from operations to debt to be about 30%.

The rating incorporates modest flexibility for additional debt-financed acquisitions or share repurchases.

Newell Rubbermaid's solid portfolio of brands and expected benefits from its restructuring plan should enable the company to maintain credit measures appropriate for the ratings over the intermediate term.

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