Moody's downgrades USEC

Moody's Investors Service said it downgraded USEC Inc.'s corporate family and probability-of-default ratings to Caa1 from B3 and its 3% convertible senior notes to Caa2 from Caa1.

This concludes the review for possible downgrade that began on July 29, and the outlook is developing.

The agency said the downgrade reflects its expectation of weak credit metrics for the company over the next several years, increasing competition from the company's three primary global competitors, numerous risks related to the development and commercial deployment of the American Centrifuge Plant and lack of certainty regarding USEC's liquidity because its revolving credit facility expires in August 2010.

The ratings are also constrained by USEC's dependence on a single production facility, the potential for higher costs for electric power, reliance on numerous agreements with the U.S. government for many important aspects of its business and regulatory risk, Moody's said.

USEC's ratings are supported by its significant market share, sizable multi-year sales backlog with investment-grade customers and a favorable supply-demand outlook for nuclear power, the agency added.

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