Moody's downgrades NTL Communications

Moody's downgraded NTL Inc. and its subsidiaries, affecting $20 billion of debt. Affecting ratings include: NTL Inc. senior unsecured rating cut to Caa3 from Caa1 and preferred stock cut to Ca from Caa3; NTL Delaware Inc. convertible subordinated notes to cut Caa3 from Caa2; NTL Communications Corp. senior unsecured notes cut to Caa2 from B3 and convertible subordinated notes to Caa3 from Caa1; NTL (Triangle) LLC senior unsecured notes cut to Caa1 from B3; Diamond Cable Communications Ltd. senior unsecured notes cut to Caa3 from B3; Diamond Holdings Ltd. senior unsecured notes cut to Caa1 from B3; NTL Business Ltd. senior secured bank facility cut to B1 from Ba3; and Cablecom (Ostschweiz) AG senior secured bank facility cut to B3 from B1.

"Today's downgrade reflects Moody's heightened concerns regarding NTL's liquidity position and longer-term ability to adequately service its debt, following the company's third quarter results announcement," the rating agency stated.

Moody's added that the lesser (one notch relative to two notches for NTL Communications) downgrade of the senior notes of Diamond Holding plc and NTL (Triangle) LLC and the more severe (three notches) downgrade of the senior notes of Diamond Cable Communications Ltd. reflect the relative asset coverage that Moody's believes is afforded to the bondholders of each of these subsidiaries.

S&P downgrades XO, Concentric Network

Standard & Poor's downgraded XO Communications Inc. and its Concentric Network Corp. unit and kept the ratings on CreditWatch with negative implications.

Ratings affected include: XO's senior notes, cut to C from CCC-; its preferred stock, cut to C from CC; its senior secured credit facility, cut to CC from CCC+; and its convertible subordinated notes, cut to C from CCC-. Concentric Network's senior notes were cut to C from CCC-.

Fitch downgrades XO

Fitch downgraded XO Communications, cutting its senior secured rating to CC from CCC-, its senior unsecured rating to D from CC and its convertible subordinated notes to D from C. The senior secured rating was put on Rating Watch Evolving.

Fitch said the downgrade follows XO's announcement it will not make the scheduled interest and dividend payments on its unsecured notes and preferred equity securities after Nov. 30. Based on the terms of the announced restructuring, XO will not seek to cure this default within the 30-day grace period.

XO will seek to waive the cross default provision in its bank debt, Fitch added.

XO announced Forstmann Little and Telefonos de Mexico SA intend to invest $800 million in exchange for equity, respectively owning 39% of XO pro forma for the recapitalization. The investment is contingent upon a recapitalization and a fully funded business plan.

Fitch said if bondholders agree to the recapitalization they will receive less than par value for the debt securities exchanged into equity.

Moody's downgrades EOTT Energy, on review for further downgrade

Moody's Investors Service downgraded EOTT Energy Partners LP's $235 million of 11% senior unsecured notes due 2009 to Ba3 from Ba2 and kept the rating on review for further downgrade.

Moody's said the notes remain under review until EOTT obtains an independent credit facility sufficient to support its business and until Enron's performance under tolling arrangements associated with EOTT's 2001 acquisition of an MTBE processing and storage complex from Enron is certain.

Enron controls 35% of EOTT's units and is its general partner but EOTT is operationally independent, Moody's said.

It added: "EOTT has been delivering improving performance, and EOTT is not imminently imperiled by Enron's financial difficulties."

Moody's said EOTT is trying to complete independent arrangements for a $300 million credit facility for letters of credit and working capital to replace the Enron facility scheduled to mature Dec. 31, 2001.

S&P rates new Toll notes BB+

Standard & Poor's assigned a BB+ rating to Toll Corp.'s newly issued $150 million of 8.25% senior subordinated notes due 2011.

S&P downgrades airline unsecured debt

Standard & Poor's downgraded its senior unsecured debt ratings on nine airlines and kept the ratings on CreditWatch with negative implications.

S&P said it took the action because of reduced asset protection for unsecured creditors and the use of revised criteria for assessing the impact of secured debt on unsecured ratings. It noted that the downgrades indicate poorer prospects for recovery if the airlines become insolvent rather than an increased default risk.

Senior unsecured ratings affected are: Air Canada, lowered to B from B+, America West Airlines Inc., lowered to C from CC, American Airlines Inc., lowered to BB- from BB, Amtran Inc., lowered to CCC from CCC+, AMR Corp., lowered to BB- from BB, British Airways plc, lowered to BB+ from BBB-, Calair Capital Corp., lowered to B from B+, Calair LLC, lowered to B from B+, Continental Airlines Inc., lowered to B from B+, Delta Air Lines Inc., lowered to BB from BB+, Northwest Airlines Corp. , lowered to B+ from BB, Northwest Airlines Inc., lowered to B+ from BB, and United Air Lines Inc., lowered to B from BB-.

S&P noted: "Airlines worldwide increasingly rely on aircraft and other asset-backed financings, rather than unsecured debt, to finance capital expenditures, a trend that accelerated since the Sept. 11 terrorist attacks in the U.S. and resulting damage to airline revenues."

While these instruments, particularly enhanced equipment trust certificates, have cost advantages, S&P said they have encumbered, either through leases or secured debt, a substantial proportion of the asset base of many airlines.

S&P rates Lyondell upcoming deal BB

Standard & Poor's assigned a BB rating to Lyondell Chemical Co.'s proposed $350 million offering of senior secured notes due 2008. S&P also confirmed its existing ratings on Lyondell, including the senior secured debt at BB and the subordinated debt at B+. The outlook is stable.

S&P said its assessment of Lyondell reflects high debt levels stemming from the 1998 acquisition of ARCO Chemical Co., which overshadow the firm's average business profile as a leading North American petrochemical producer.

The rating agency said Lyondell's strong market position as the world's largest producer of propylene oxide is bolstered by large-scale and cost-efficient operating facilities.

Long-term prospects for propylene oxide profitability remain relatively good, S&P said, although variations in the pricing of oil-based feedstocks and the level of economic activity can affect short-term results.

While demand has diminished recently due to economic conditions, S&P sees long term growth of 3%-5% annually.

S&P downgrades Outsourcing Services, on negative watch

Standard & Poor's downgraded Outsourcing Services Group Inc. and put it on CreditWatch with negative implications. Total debt of $170 million is affected, including its senior secured debt, cut to B+ from BB- and its subordinated debt, cut to CCC+ from B-.

S&P said its actions reflect the company's "limited financial flexibility resulting from weaker-than-expected operating performance, and increased debt levels from the company's acquisition strategy."

In addition, the company is again talking to its bank group about loosening covenants because it does not expect to be in compliance for the quarter to Dec. 31, 2001, S&P said. Outsourcing Services already negotiated new covenants in August.

S&P downgrades Vertis

Standard & Poor's downgraded Vertis Holdings Inc. and its unit Vertis Inc. Ratings affected include, Vertis' senior secured bank loan cut to B+ from BB- and its subordinated debt, cut to B- from B. The outlook is stable.

S&P said it downgraded the company because of expectations that current market conditions mean Vertis' consolidated financial profile will be "weaker than expected for 2001 and that the recovery in 2002 operating performance will likely be only a moderate improvement."

The ratings also reflect Vertis' "significant debt levels and competitive market conditions" although these factors are "tempered by the company's leading market position in the advertising insert segment, where the company is one of the largest participants."

Fitch cuts Ocwen outlook to negative, downgrades subordinated debt

Fitch changed its outlook for Ocwen Financial Corp. and Ocwen Federal Bank FSB to negative from stable, affirmed Ocwen Financial's senior debt at B and lowered Ocwen Federal Bank's subordinated debt to B- from B.

Fitch said the outlook change and downgrades reflect "the challenges management still faces in achieving dispositions goals and turning Ocwen Technology Xchange, Inc. into a positive contributor."

Fitch added that "the ratings will continue to be influenced by the company's ability to maintain a mortgage-servicing portfolio of sufficient size to offset the costs of its operating platform and ongoing investment absent a core origination capability. In addition, the company's ability to attract users to its servicing and origination technology offerings, as well as its ability to generate proceeds from the greatly reduced base of interest earning assets, owned real estate, and remaining real estate investments will be material considerations."

Fitch downgrades Omega Healthcare Investors, on negative watch

Fitch downgraded Omega Healthcare Investors, Inc.'s $97.6 million 6.95% senior unsecured notes due June 15, 2002 and $100 million 6.95% senior unsecured notes due Aug. 1, 2007 to B- from B+ and put the ratings on negative watch. It affirmed its D rating on Omega's outstanding $57.5 million series A 9.25% cumulative preferred stock and $50 million series B 8.625% cumulative preferred stock.

Fitch said it took the action because of liquidity concerns about the company's $236.6 million of scheduled debt maturities in 2002 and "the continued weakness" in Omega's operations.

The rating agency commented: "The company's ability to secure needed financing continues to be hampered by the operating and capital market conditions for skilled nursing home facilities, which currently represents approximately 90% of Omega's $840 million of assets (net book value as of Sept. 30, 2001)."

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