S&P rates Deutsche Telekom convert BBB+

Standard & Poor's assigned a BBB+ long-term debt rating to Deutsche Telekom International Finance BV's guaranteed €2.3 billion ($2.5 billion) of 6.5% mandatory convertibles due 2006.

Analytically, S&P will exclude the convertible from DT's net debt calculations, as it is expected to be converted into shares and not repaid in cash. But the interest, about €150 million per year, will be included in DT's fixed-charge coverage measures.

Deutsche Telekom's ratings continue to be underpinned by the expectation that the group can deliver on its demanding free operating cash flow targets of €5 billion to €6 billion per year from 2003, S&P said.

Key operational challenges include the introduction of local call carrier preselection in 2003, a challenging macroeconomic environment in all key markets and uncertainties about the medium-term performance of Voicestream Wireless Corp.

S&P affirms Sierra Pacific

Standard & Poor's Ratings affirmed the ratings of Sierra Pacific Resources and its utility subsidiaries and removed them from CreditWatch with negative implications, following the successful completion of Sierra Pacific's $300 million of 7.25% convertible notes issue, which was rated B-.

The outlook is now negative.

Ratings reflect the adverse regulatory environment in Nevada, substantial operating risk arising from the dependence on wholesale markets for over 50% of the energy requirements and a substantially weakened financial profile following the disallowance by Nevada regulators of $434 million in deferred power costs.

Sierra Pacific's financial position will continue to be strained, with cash flow interest coverage expected to be under 3x and adjusted debt to total capital at over 55% for the next few years.

With the convertible, pressure on liquidity has eased, with the next maturity in 2005, S&P said.

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