Moody's revises Dominion outlook

Moody's Investors Service revised the outlook for Dominion Resources Inc. (Baa1 senior unsecured) to negative from stable given concerns over financial risk from debt financed growth, notwithstanding steps to reduce leverage.

Over the medium term, Moody's said it will monitor equity offerings to determine whether amounts sufficiently offset business risk undertaken at subsidiary levels and capital expenditure at subsidiary levels, among other factors.

Moody's will contemplate a return to stable outlooks pending successful execution of the financial plan over the next six to nine months.

Execution delay or deviation from the plan by such factors as unanticipated event risk from debt financed acquisitions will cause Moody's to review securities for potential downgrade.

S&P rates Affiliated Computer revolver

Standard & Poor's assigned a BBB senior unsecured rating to Affiliated Computer Services Inc.'s $875 million revolving credit facility due Dec. 31, 2005.

Also, S&P confirmed the company's debt ratings, including the 3.5% convertible due 2006 at BBB-.

The outlook is stable.

The acquisition of Lockheed Martin IMS Corp. in August 2001 will likely add to earnings, but faces competitive threats from larger, better-financed companies, as well as challenges of integrating acquisitions, S&P said.

Although operating in a fragmented and competitive industry, the company has averaged about 40% revenue growth over the past four years, half of which was generated internally.

The company has also maintained relatively good cash flow and profitability measures, S&P added.

Fitch rates new Cox issue BBB

Fitch Ratings assigned a BBB rating to Cox Communications Inc.'s proposed $500 million 10-year senior notes offering, which has been doubled to $1 billion, from which proceeds will be used to meet upcoming debt maturities. The outlook is stable.

Cox continues to post strong revenue and EBITDA growth and increased penetration of bundled services.

Concerns include the significant amount of debt and hybrid securities and, although trending downward, sizeable capital expenditures.

Ratings also factor in an expectation that Cox will not pursue any major acquisitions near term and that EBITDA after capital expenditures, cash interest, cash taxes and changes in working capital will be positive for 2003.

For the last 12 months ended June 30, Cox had adjusted debt, including $500 million of RHINOS, to EBITDA of 4.9x and EBITDA to interest and dividends on the convertible PRIDES and RHINOS of 2.6x.

Fitch expects debt to EBITDA to improve to the low 4x range by the end of 2003.

S&P rates new Cox issue BBB

Standard & Poor's assigned a BBB rating to Cox Communications Inc.'s new $1 billion senior notes due 2012. The outlook is stable.

Ratings are supported by a well-diversified media portfolio with good operating margins, solid positions and significant asset value, S&P said.

Positive attributes are mitigated by high consolidated debt, heavy capital spending levels and an aggressive acquisition and growth orientation.

System upgrade projects have begun to wind down, so discretionary cash flow losses are now declining.

In 2003, the company expects to generate positive discretionary cash flow, based on a $1.6 billion capital spending budget.

Pro forma GAAP debt at June 30 was about $7.5 billion, although this is understated by about $1.1 billion related to a FASB adjustment for derivatives. S&P includes this $1.1 billion and excludes some $2 billion of Sprint PCS-linked convertibles that appear as debt on the consolidated balance sheet.

S&P said it expects further significant progress towards positive discretionary cash flow, as well as continuing improvement in key credit measures on a consolidated basis.

Any softening of credit measures from operating weakness, debt-financed acquisitions, or share repurchases could undermine rating stability.

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