S&P rates River Rock notes B+

Standard & Poor's assigned a B+ rating to the River Rock Entertainment Authority's proposed $190 million senior secured note offering due 2011. The outlook is stable.

The ratings reflect the Authority's narrow business focus operating a single gaming facility, relatively short operating history, high debt levels and the potential for increased competition in the future, S&P said. These factors are mitigated by favorable demographics, the current limited competitive situation in its surrounding market, and the potential for EBITDA growth post-construction.

River Rock is capacity constrained during peak operating hours due to limited parking at the facility, S&P noted. The Tribe is currently adding three parking structures, bringing the total number of spaces to 2,100 from 500 when including both self and valet-parked automobiles.

Although the company's planned parking expansion will increase debt levels, S&P expects River Rock to experience EBITDA growth following construction completion, allowing the Authority's overall financial profile to remain good for the rating. The rating agency expects total debt to EBITDA will be close to the 6.0x area in 2004. Credit measures are expected to improve meaningfully in 2005 as the parking structures open, thus improving access to the property.

Moody's cuts Steelcase to junk

Moody's Investors Service downgraded Steelcase Inc. to junk including lowering its $250 million senior unsecured notes due 2006 to Ba1 from Baa3. The outlook is negative.

Moody's said its downgrade is based on an expectation that Steelcase's reduced revenue, operating income and cash flow are likely to persist over the near term, as demand for contract office furnishings remains sluggish.

Additionally, the downgrade reflects the risks associated with inefficiencies or additional charges arising from the company's ongoing restructuring program.

Moody's said the negative outlook is based on its expectations that Steelcase's ability to realize the full benefits of its lower overhead cost structure may remain challenged by weak demand and that its reduced scale of operations could generate additional asset impairment charges over the intermediate term.

Moody's raises East Coast Power to investment grade

Moody's Investors Service upgraded the senior secured notes of East Coast Power LLC to Baa3 from Ba2. The outlook is stable.

Moody's said the upgrade was made after giving effect to El Paso Merchant Energy's sale of its 99% interest in East Coast Power to GS Linden Power Holdings LLC for $456 million on Oct. 15.

El Paso Merchant Energy is a subsidiary of El Paso and GS Linden Power Holdings is a subsidiary of Goldman Sachs Group, Inc.

The upgrade and the stable outlook reflect the stability and predictability of East Coast Power's cash flows as approximately 94% of its consolidated cash flows are derived from contractual sources. The power purchase agreements extend beyond the tenor of the senior notes, and are with creditworthy entities, Consolidated Edison Co. of New York (senior unsecured: A1) and ConocoPhillips (senior unsecured: A3).

The upgrade also reflects the transfer of East Coast Power's ownership to Goldman Sachs, an Aa3 rated entity, from El Paso Corp. (senior unsecured: Caa1).

The investment grade rating also reflects the strategic location and the historical operating performance of East Coast Power's generating assets.

ECP's debt service coverage ratios are significantly below the average level of other power projects at the Baa3 rating level until 2008, Moody's noted.

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