S&P confirms Conseco Finance, off watch

Standard & Poor's confirmed Conseco Finance Corp. and removed it from CreditWatch with negative implications. The outlook is negative and the corporate credit rating is B-.

S&P said it had initially put Conseco Finance on CreditWatch because of concerns it would be hard pressed to meet its 2002 debt maturities.

"Since this time, the finance company and its parent have succeeded in raising a significant amount of cash through asset sales and other measures to redeem at full face value all rated unsecured debt of the finance company coming due this year," S&P said, although it added that the company continues to face a number of challenges.

In particular, the rating agency said the lingering effects of the recession could increase asset quality problems.

Moody's upgrades American Axle notes, raises outlook

Moody's Investors Service upgraded American Axle & Manufacturing, Inc.'s $300 million 9.75% guaranteed senior subordinated notes due March 2009 to Ba3 from B1 and confirmed the company's other ratings including its $753.8 million of bank facilities at Ba2. It also raised the outlook to positive from stable.

Moody's said its actions reflect American Axle's steady increase in content per vehicle to in excess of $1,100, attained in conjunction with the company's transition to generating more than 70% of its revenues from new technology products introduced since 1998. Also factors are the stable sales and operating margins and successfully program launches during the challenging 2001 year and mandates to launch 14 new programs during the first half of 2002. In addition, managed expects capital expenditures to decline by $100 million in 2002 and stabilize going forward at a more manageable multiple of depreciation.

American Axle has also fully overhauled former General Motors plants, added significant new capacity and has flexible state-of-the art equipment that can be readily re-utilized as older programs start to run off, Moody's said.

Moody's said it raised the notes to only one notch below American Axle's bank debt because it believes the relative expected default risk is now lower and the effective recovery rate higher.

Moody's lowers Magellan outlook to negative

Moody's Investors Service lowered its outlook on Magellan Health Services to negative from stable. The action affects $1 billion of debt and bank facilities with a senior implied rating is B1.

Moody's said its action is in response to concerns that higher cost trends and potential increases in state-restricted payments may constrain already tight levels of free cash flow after Aetna earn-out payments. In addition, Moody's believes there is greater pricing uncertainty associated with the renewal of Magellan's contract with Aetna which expires at the end of 2003.

Moody's said higher medical costs are primarily related to employee assistance program utilization. EAP use has increased following Sept. 11 and the economic downturn as more employers encouraging employees to seek assistance.

In addition, some state departments of insurance are requiring companies such as Magellan to set aside additional reserves because of provider insolvency issues, Moody's said. While a modest portion of total restricted funds at present, Moody's said they may potentially be significant relative to Magellan's limited free cash flow after the Aetna earn-out payments.

Fitch downgrades EES Coke

Fitch Ratings downgraded EES Coke Battery Co. Inc.'s $75 million senior secured notes series B due 2007 to CCC from B- and put them on Rating Watch Negative and confirmed its $168 million senior secured notes series A due April 15, 2002 at BBB.

Fitch said its action follows National Steel Corp.'s Chapter 11 filing.

The series A notes are rated BBB thanks to the stability in cash flow provided by tax credit payments from DTE Energy Co. and their short remaining term, Fitch said.

Fitch's action on the series B notes reflects the likelihood of timely debt service payments.

At the time of National Steel's bankruptcy filing, EES Coke had two months of outstanding receivables due from National Steel, Fitch said.

Project management believes this amount will be paid once the Coke Sales Agreement is reaffirmed by the bankruptcy court, Fitch noted.

EES Coke management has told Fitch its current liquidity position is sufficient to cover current expenses and the debt service payment due April 15, 2002, without needing to tap into the six-month debt service reserve.

S&P downgrades Song Networks

Standard & Poor's downgraded Song Networks NV and kept the company on CreditWatch with negative implications.

Ratings affected include its $150 million 13% with warrants notes due 2009 €100 million 13% notes due 2009, €150 million 11.875% notes due 2009 and €175 million 12.375% notes due 2008, all lowered to CC from CCC.

S&P downgrades Hughes

Standard & Poor's downgraded Hughes Electronics Corp. assigned a BB rating to its new bank loan and kept the company on CreditWatch with negative implications. Its corporate credit rating is now BB-.

S&P said the ratings are on CreditWatch pending the outcome of Hughes' merger with EchoStar Communications Corp., which is uncertain at this time. The combined company will have a corporate credit rating of either BB- or B+.

The rating agency said its downgrade of Hughes "was based on a more thorough determination of the credit quality of Hughes on a stand-alone basis, in light of the new financing, should the merger not be approved."

Hughes increased the size of its revolving credit facility to $1.235 billion from $750 million and is currently syndicating a $577 million term loan.

Moody's rates Joy Global notes B2

Moody's Investors Service assigned a B2 rating to Joy Global Inc.'s planned offering of $200 million of senior subordinated notes due 2012 and confirmed its existing ratings including its $250 million senior secured revolving credit facility at Ba2. The outlook is stable.

Moody's said Joy Global's ratings are limited by reduced spending by the global mining industry on new equipment due to very low prices for many commodities, cautious capital investment spending and active and ongoing consolidation in the industry.

Consolidation has reduced demand for equipment and spare parts, at least temporarily, as companies rationalize these areas, Moody's said.

While consolidation concentrates Joy Global's sales with fewer customers, it aids the execution of the company's life cycle management strategy, the rating agency added.

Moody's also noted Joy Global has high fixed costs, the SG&A costs associated with a large international sales and service network, a $185 million pension liability and fairly high levels of letters of credit, approximately $61 million as of Feb. 2, 2002.

On the positive side, Joy Global benefits from a commanding market share and reputation for technologically advanced, high quality underground and surface mining equipment and its exposure to cyclical commodity metal markets is mitigated by its large installed base of equipment and the high proportion of its sales related to relatively stable aftermarket parts and services, Moody's said.

Moody's downgrades Foster Wheeler, still on review

Moody's Investors Service downgraded Foster Wheeler Ltd.'s long-term debt to B3 from B1 and kept them on review for possible further downgrade, affecting $1.2 billion of debt. Also lowered are Foster Wheeler's convertibles and trust preferreds, to Caa2 from B3.

Moody's said its action reflects heightened concern that Foster Wheeler is heavily reliant on the willingness of its bank groups to extend near-term debt maturities and that its negotiations with its various banking groups may become protracted.

Moody's also has concerns about the company's operating outlook, financial health and liquidity position in light of the ongoing downturn in its end markets, which has resulted in lower revenues, earnings, and cash flow generation over the past several quarters, and which Moody's expects will continue throughout 2002.

Moody's rates new United Auto notes B3

Moody's Investors Service assigned a B3 rating to United Auto Group, Inc.'s proposed $225 million senior subordinated notes due 2012. The outlook is stable although Moody's said the ratings are weak for the category and subject to change if there is a rapid deterioration in operating performance or an increase in acquisition activity.

Moody's said its assessment of United Auto reflects the company's "high leverage due largely to the financing of goodwill from a relatively aggressive acquisition strategy; historically low operating margins relative to similarly sized rated peers; added risk from the upcoming acquisition of the Sytner Group in the U.K., which Moody's believes may be dilutive to debt protection measures and will not provide operating benefits to the US business; and the potential for margins and coverage levels to deteriorate as interest rates rise, increasing the cost of floor plan financing."

Moody's downgrades Ethyl

Moody's Investors Service downgraded Ethyl Corp. and gave the company a negative outlook. Ratings lowered include its senior implied issuer rating to Ba3 from Ba1 and its senior unsecured issuer rating to B1 from Ba2.

Moody's said it cut Ethyl because of the company's weakened financial performance, continued high debt levels and near-term liquidity concerns.

Ethyl's financing needs are mostly met through its bank credit agreement, which comes due in August 2002. Moody's anticipates the company will successfully renew its credit facility but Moody's said the downgrade reflects the bullet nature of the repayment, which creates a large amount of funds that need to be refinanced relative to Ethyl's operating cashflow.

The negative outlook is in response to competitive pressures and excess capacity that Moody's said limit the potential for a recovery.

S&P rates Entravision notes B-

Standard & Poor's assigned a B- rating to Entravision Communications Corp.'s planned offering of $200 million senior subordinated notes due 2009 and a B+ rating to its $250 million revolving credit facility due 2007 and $200 million term loan B due 2007.

S&P downgrades KMC

Standard & Poor's downgraded KMC Telecom Holdings Inc. and kept the company on CreditWatch with negative implications.

Ratings lowered include KMC's $225 million 13.5% senior notes due 2009 and $250 million 12.5% senior discount notes due 2008, both lowered to C from CCC-, and its $750 million secured bank loan, lowered to CCC- from CCC+.

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