S&P cuts Sirius Satellite Radio

Standard & Poor's downgraded Sirius Satellite Radio Inc. and put the company on CreditWatch with negative implications. Ratings affected include Sirius' $116 million 15% senior discount notes due 2007 and $200 million 14.5% senior secured notes due 2009, cut to CCC from CCC+ and its $125 million 8.75% convertible subordinated notes due 2009, cut to CC from CCC-.

S&P said the action follows Sirius' announcement that it is in discussions with key debtholders about exchanging a significant portion of debt for equity.

S&P said it is concerned that a debt restructuring could be significantly detrimental to bondholders. The rating agency noted that completion of an exchange offer at less than the par value would be tantamount to a default.

S&P says Nextel unchanged

Standard & Poor's said Nextel Communications Inc.'s ratings and outlook are unchanged on the announcement that it has retired $733 million in debt and preferred securities since June 30 in exchange for 33 million common shares and $205 million in cash. S&P assigns a B+ corporate credit rating to Nextel with a negative outlook.

S&P said it views the repurchase favorably because the company did not use a material amount of liquidity to accomplish this moderate reduction in total debt.

But the rating agency added that intense competition in the wireless industry and the fact that Nextel remains highly leveraged somewhat offset the impact of this move.

S&P cuts Air2US

Standard & Poor's downgraded Air2US LLC's enhanced equipment notes and kept them on CreditWatch with negative implications. Series A was cut to BBB- from BBB+, series B to B+ from BB+, series C to B from BB and series D to B- from B+.

S&P noted that Air2US relies on lease rental payments on planes leased to American Airlines Inc. and United Air Lines Inc.

United leases 22 A320-200 jet aircraft from Airbus units, representing more than half of the total rentals related to this transaction, with the remainder paid by American Airlines to lease 19 A300-600R planes (one of which has since been removed due to its loss in an accident) from other units of Airbus, S&P noted.

S&P said the ratings on Air2US were lowered following the downgrade of United Air Lines.

S&P cuts Tri-Union

Standard & Poor's downgraded Tri-Union Development Corp. including lowering its $130 million 12.5% senior secured notes due 2006 to D from CCC-.

S&P said the action follows Tri-Union's announcement that it will be unable to obtain clear title to an oil and gas well needed as part of its waiver of the $8.1 million interest payment that was due June 1 on its senior secured notes due 2006.

The failure to obtain the title constitutes a default under the terms of the waiver and bond indenture, S&P noted.

Moody's cuts FertiNitro

Moody's Investors Service downgraded FertiNitro Finance Inc.'s $250 million secured bonds to B2 from Ba3. The outlook is negative. FertiNitro Finance Inc. is a financing vehicle whose debt is guaranteed by Fertilizantes Nitrogenados de Venezuela, Fertinitro, CEC.

Moody's said the downgrade reflects weakening of cash flows due to additional operating problems and low market prices for FertiNitro's fertilizer products.

Moody's said it expects FertiNitro will need to use project reserve facilities and available sponsor support for its October 2002 debt service payment. Currently a $60 million line of credit facility and $20 million of sponsor support is available.

The latest operational difficulties, which cut production levels to 75% and 62% of plan for ammonia and urea respectively, resulted in the shutdown of both ammonia trains due to air compressor problems, Moody's said. Urea production problems also continue.

While urea prices rose in July, prices remain significantly below levels that were projected in the Offering Circular and related documents, Moody's added. The near=term price outlook is not favorable as there have been additions to market capacity this year and demand is weak due to adverse weather conditions in several key agricultural markets.

Moody's puts Iusacell on review

Moody's Investors Service put Grupo Iusacell and Grupo Iusacell Celular on review for possible downgrade including Iusacell's senior unsecured debt at B1 and Iusacell Celular's senior unsecured debt at Ba2.

Moody's said it started the review of Iusacell because of uncertain support from Verizon, the largest shareholder, performance declines, due largely to market share erosion mainly to Telcel, continuous changes in Grupo Iusacell's management team which has generated an inconsistent operating strategy, a more difficult competitive environment following Telefónica de Espana's recent acquisition of Pegaso, a wireless operator with a national PCS license, and weakening credit metrics.

The net debt to reported EBITDA ratio (excluding non-recurring items) was 4.0x by the end of the second quarter of 2002 from 3.1x at year-end 2001, Moody's said. EBITDA coverage was 2.1x in the second quarter, from year-end 2001 levels of 2.3x.

S&P raises Weirton Steel

Standard & Poor's upgraded Weirton Steel Corp. The outlook is developing. Ratings affected include Weirton's corporate credit rating, raised to CCC from D. S&P also assigned a CCC- rating to the company's new senior secured credit facilities.

S&P said the actions follow Weirton's recently completed debt restructuring.

Under the restructuring, Weirton has reduced annual operating costs by approximately $51 million beginning in third quarter of 2002, S&P noted. The company has negotiated a new labor agreement that will has allowed for reductions in both union and management personnel. The company's strategic plan involves attracting an equity partner, completing an expensive polymer process commercialization, and attempting to resolve legacy liabilities.

Given the high degree of uncertainties associated with its plan, resolving these issues will be difficult, S&P commented.

Moody's cuts Escelsa

Moody's Investors Service downgraded Espirito Santo Centrais Eletricas SA (ESCELSA) foreign currency debt rating to B2 from B1, affecting $500 million of debt.

Moody's said the action follows its downgrade of Brazil's foreign currency rating for bonds and notes to B2 from B1.

S&P confirms Consolidated Container, off watch

Standard & Poor's confirmed Consolidated Container Co. LLC and removed the ratings from CreditWatch with negative implications. The outlook is negative. Ratings affected include Consolidated Container's $185 million 10.125% senior subordinated notes due 2009 at CCC and its $90 million revolving credit facility due 2005, $150 million term A loan due 2005 and $235 million term B loan due 2007, all at B-.

S&P said the action follows Consolidated Container's announcement that it is in compliance with the financial covenants related to its bank facilities.

This disclosure provides a measure of relief from immediate liquidity pressures, particularly in view of sequential improvement in financial performance in the second quarter of 2002, S&P said.

Consolidated has faced significant operating challenges related to new capital projects for key customers (since the third quarter of 2001), which has adversely affected profitability levels, S&P noted.

Near-term operating performance reflects sequential improvement in operating margins supported by partial benefits of ongoing restructuring efforts, offset by increased plant labor, repairs and maintenance costs, and lower-than-expected volumes from new projects and certain key customers, the rating agency added. Rising raw material prices (although still below previous year's levels) could cause temporary margin compression until the company passes through higher resin costs under contractual relationships with customers.

Financial risk remains high with EBITDA interest coverage (adjusted for capitalized operating leases) below 2 times and total adjusted debt to EBITDA of more than 7x for the 12-month period ended June 30, 2002, S&P said. Despite lower capital spending levels, free cash generation (after cash restructuring costs) is expected to be marginal in 2002.

The timely completion of management's restructuring initiatives is expected to gradually support improvement in profitability and cash generation in the intermediate term, S&P said. Accordingly, key credit protection measures, including the ratio of EBITDA to interest and total adjusted debt to EBITDA are expected to improve to appropriate levels of above 2x, and the 5.0x-5.5x range, respectively.

Fitch cuts Manquehue

Fitch Ratings downgraded Manquehue Net SA's foreign currency and international scale local currency ratings to CCC+ from B+. the outlook remains negative.

Fitch said the action reflects Manquehue's continued weak financial performance, debt restructuring uncertainties and uncertain shareholder commitments as the company is up for sale.

Credit protection measures have declined as Manquehue increased debt by more than $55 million to fund its network buildout without achieving the anticipated revenue growth, Fitch said.

EBITDA/gross interest and debt/EBITDA was 1.6 times and 7.4x, respectively compared to 2.3x and 4.4x a year earlier.

Manquehue will violate a syndicated loan covenant if debt/EBITDA exceeds 8.0x, Fitch noted.

S&P cuts Banco Hipotecario

Standard & Poor's downgraded Banco Hipotecario SA.

Ratings lowered include Banco Hipotecario's $100 million 10.625% notes series 3 due 2006, $300 million 10% notes due 2003, $150 million 13% notes series 4 due 2008, $125 million 12.625% notes series 16 due 2003 and €150 million 10.75% notes due 2004, all cut to D from CC.

S&P rates Dade Behring's loan B+; notes B-

Standard & Poor's rated Dade Behring Inc.'s proposed $575 million credit facility at B+, proposed $315 million senior subordinated note offering at B- and corporate credit rating at B+ pending successful emergence from a pre-packaged bankruptcy. The outlook is stable.

S&P said the speculative-grade ratings reflect Dade's concentrated business base in the face of stronger competitors and the rating agency's concern regarding market reaction to the company in its immediate post-bankruptcy period. These challenges are partly offset by Dade's leading business positions, broad product offerings, and the relatively predictable reagent revenue stream tied to Dade's installed specialty medical equipment.

After emerging from Chapter 11, the company is expected to have total debt of about $820 million, lease-adjusted debt to capital of about 55% and pro forma near-term EBITDA fixed charge coverage of about 3 times.

S&P cuts EOTT

Standard & Poor's downgraded EOTT Energy Partners LP and kept the company on CreditWatch with negative implications. Ratings lowered include EOTT's $235 million 11% senior notes due 2009, cut to CC from B-.

S&P said the action reflects the continued deterioration in EOTT's financial position as its management struggles to deal with the consequences of Enron Corp.'s bankruptcy. An Enron subsidiary is EOTT's general partner.

EOTT reported "very poor" operating results in the first half of 2002 and is not in compliance with covenants in its credit facility, S&P noted.

Restoration of EOTT's credit quality will depend on its ability to manage and resolve near-term liquidity issues and longer-term operational and financial issues, S&P said.

EOTT's experience as part of the fallout of the Enron situation has coincided with weakening margins in the crude marketing and pipeline operations and increased risk surrounding a methyl tertiary butyl ether (MTBE) facility and related storage assets that were acquired from Enron in 2001, S&P said.

Because EOTT needs to have sufficient liquidity to support its trading and marketing activities, S&P said it places great importance in the credit analysis on the company's continued access to short-term liquidity.

EOTT's declining credit quality has prompted counterparties to demand greater credit support to continue doing business with EOTT, which has led to severe liquidity problems, higher costs, and a cut-back in the amount of business activity due to credit constraints, S&P said. EOTT is essentially out of liquidity, as its $300 million of credit facilities are almost completely drawn upon and its banker has agreed to a limited forbearance until mid-September to attempt to modify the current credit facility terms. The semi-annual $13 million payment on its unsecured bonds is due Oct. 1, 2002.

Moody's cuts Pegasus

Moody's Investors Service downgraded Pegasus Communications Corp.'s subsidiaries, including Pegasus Satellite Communications, Inc. and Pegasus Media & Communications, Inc. The outlook remains negative. Pegasus Satellite Communications' notes were cut to Ca from B3, its senior subordinated discount exchange notes to C from Caa1 and its preferred stock to Caa1 from B1. Pegasus Media & Communications' credit facility was cut to B3 from Ba1 and its senior subordinated notes to Caa3 from B3.

Moody's said the downgrades reflect its concerns about Pegasus' ability to continue operating under its current capital structure, and Moody's belief that a restructuring will most likely be needed, and that loss severity will be greater than originally anticipated under its revised expectations.

Moody's noted that Pegasus has underperformed relative to both original and revised management projections over the last two quarters.

Moreover, when the outlook was revised to negative back in December 2001, Moody's specifically cited the risks posed by the proposed EchoStar-Hughes merger as potentially disrupting if not jeopardizing the future business prospects and/or viability of Pegasus.

Moody's said those risks and uncertainties remain subject to regulatory and judicial review, and are still very evident.

Additionally, Pegasus' proposed refinancing transaction failed to get completed as anticipated, leaving the stub Pegasus Media notes outstanding and resulting in a reduced boost to the company's liquidity profile, Moody's said.

Although these were not deemed to be that significant at the time, the company's recent term loan placement and security repurchases, specifically of preferred and common stock, in conjunction with the perceived plateauing of the company's business growth prospects, have caused Moody's to significantly alter its view of the underlying credit profile.

S&P withdraws Atlantic Express ratings

Standard & Poor's withdrew its ratings on Atlantic Express Transportation Corp. following the company's Chapter 11 filing.

Ratings affected include Atlantic Express' $120 million 10.75% senior secured notes due 2004 previously rated D.

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