S&P cuts Haliburton long-term credit rating to A- from A+

Standard and Poor's on Tuesday reduced Halliburton's long-term credit rating to A- from A+, and the company's commercial paper rating from A1 to A2. The rating agency said Halliburton already faces $152 million of asbestos-related jury verdicts and judgments. S&P said it is concerned that the recent results and award amounts could portend a material increase in the resolution costs of asbestos-related claims, which could raise litigation costs and embolden plaintiffs to seek higher awards.

Moody's rates credit facilities for Duke Energy at A1, Duke Capital at A3

Moody's on Tuesday assigned bank loan ratings to new facilities arranged for Duke Energy Corp. and Duke Capital Corp., its downstream holding company. Moody's assigned an A1senior unsecured rating to $950 million in facilities arranged for Duke Energy and A3 senior unsecured ratings to $2.175 billion in facilities arranged for Duke Capital. These facilities provide alternate liquidity for commercial paper programs and closed in August.

A $475 million 364-day credit agreement and a $475 million three-year credit agreement comprise the facilities arranged for Duke Energy. Similarly, a $550 million 364-day facility and a $550 million three-year credit agreement comprise two facilities arranged for Duke Capital. Bank of America was syndication agent and Chase Manhattan Bank was administrative agent for all facilities, Fitch said.

A $537.5 million three-year agreement and a $537.5 million 364-day agreement comprise the facilities arranged for Duke Capital. These provide letters of credit for Duke Capital, the unused portion of which may also back-stop commercial paper. Bank One was administrative agent and Bank One Capital Markets was lead arranger for these facilities, Fitch said.

Fitch rates GTech convertibles at BBB+

Fitch on Tuesday rated GTech Holdings Corp.'s proposed $150 million convertible debentures due 2021 at BBB, and affirmed its BBB+ ratings on GTech's $300 million of private placement issues and its $300 million revolving credit facility.

Most of the company's revenue and operating income is derived from the lottery industry. The company maintains a dominant worldwide position with contracts to operate and/or supply equipment to 81 of the 143 on-line lottery authorities around the world. In the U.S. the company is also the leading provider of lottery systems, operating or supplying equipment to online lottery systems in 24 of the 38 states.

GTech's ratings reflect its leading global market position, Fitch said, which provides generally predictable earnings and cash flow as well as diversification, a strong technology base and a history of high contract renewal rates. Credit protection measures are strong with EBITDA coverage of interest in the double digits over the past five years and total debt to EBITDA generally at 1.0 times over the period. Over the same timeframe, the company has generated positive net free cash flow despite heavy capital expenditures and this is expected to continue. While stock repurchases have increased leverage recently, GTech is expected to generate ample cash flow to meet a currently modest authorization - $91 million through February 2003 - if it desires to complete the program.

Despite GTech's dominant market share, contract renewal remains a risk, Fitch said. Termination of one or more contracts or a change in terms could have adverse implications on other contract extensions. Significantly mitigating this concern is GTech's strong historical record with renewals, its solid relationships and the ability to continue to enhance revenue growth for the state lottery authorities. Also of some concern would be increased competition from diversified technology solution companies. However, states prefer to award lottery contracts to one company and this would require states to unbundle the service and product components of lottery work.

Moody's confirms Fiat long-term rating at Baa2

Moody's Investors Service on Tuesday confirmed the Baa2 long-term and Prime-2 short-term ratings of entities guaranteed by Fiat SpA. The rating outlook remains stable. The confirmation follows Fiat's announcement of a series of operational and financial initiatives that will strengthen the company's balance sheet, and could improve its longer-term competitive position. These initiatives include a fully underwritten €1.0 billion rights offering, a $2.2 billion sale of senior notes exchangeable into approximately 32 million shares of General Motor's common stock, a plan to expand the pool of non-core assets available for disposal beyond Magneti Marelli, and thereby raise €2 billion in proceeds during 2002, an acceleration of a restructuring program that will result in a €800 million charge to earnings, with a cash outflow of only €150 million and a reorganization of Fiat Auto into four business units - Fiat/Lancia, Alfa Romero, International Development and Services.

Moody's expects that proceeds from the rights offering and the exchangeable notes will be used to repay existing debt and that the overall effect will be to lower Fiat's interest burden and improve its financial flexibility. These transactions should afford the company with adequate near-term financial flexibility at the Baa2 rating level as it continues implementing important operating initiatives. Nevertheless, Fiat will face formidable challenges over the intermediate-term. These challenges include the softening of automotive and truck demand in Europe, the continuing weakness in the North American construction equipment market, and a large debt burden.

In order to successfully address these challenges and avoid pressure on the current rating and outlook, Fiat will have to demonstrate steady near-term progress in pursing various initiatives, Moody's said. These initiatives include implementing its updated disposal program and using the proceeds to further reduce debt, achieving the planned €900 million of cost reductions during 2002 as a result of its accelerated restructuring program, remaining on track for the synergies anticipated from the GM alliance and the Case/Newholland merger and building the market position of the newly-introduced Stilo.

Fitch cuts Fiat senior unsecured ratings to BBB from A-

Fitch on Tuesday lowered Fiat SpA's senior unsecured rating to BBB from A-, and affirmed the F2 short-term rating. The long-term rating outlook is stable. Fitch said the downgrade follows the expected negative effects on Fiat's financial profile from the lower fiscal 2001 cash generation of the automotive operations and the substantial challenges still faced by its majority shareholding in CNH Global NV, to which Fiat provides considerable financial support. CNH was formed at the beginning of fiscal 2000 from a takeover of Case Corp. by Fiat's agricultural and construction equipment unit, New Holland and is characterized by a sub-investment grade credit profile, Fitch said. Many of the past acquisitions have been financed with debt, elevating the group's leverage and weakening credit protection measures, Fitch added.

Current market conditions have also delayed Fiat's disposals planned to streamline activities and to lower indebtedness, as a result of which the group was unlikely to meet its fiscal yearend 2001 de-leveraging target, Ftich said. Fitch added that it does, however, recognize Fiat's efforts in reshaping the group's businesses against the background of continuing cost reduction exercises, noting the further restructuring of its operations to strengthen the balance sheet structure and improve financial flexibility that a new exchangeable offering was a part of. Fitch said it believes the achievement of these initiatives will reduce a possible downward pressure on the rating.

Fitch rates PartnerRe mandatory convertibles at A

Fitch has assigned ratings to the trust preferred and mandatory convertible preferred securities offered by PartnerRe Ltd. pursuant to its shelf registration statement filed Oct. 6. Fitch assigned an A rating to the $200 million in trust preferred securities due 2031 sold by PartnerRe Capital Trust I, and an A rating to the $200 million in mandatory convertible preferred securities (PEPS units) sold by PartnerRe. The latter are expected to be converted to common equity by 2004. The rating outlook is stable, Fitch said.

The $400 million of proceeds from the offerings substantially replaces the capital lost in the events of Sept. 11, Fitch said. Fitch attributes substantial equity credit to the hybrid securities in assessing their impact on PartnerRe's capital position, the rating agency noted.

Fitch said it gained comfort with PartnerRe's loss estimate from the events of Sept. 11 following discussions with management who detailed the company's methodology for developing its estimate. The grounds-up approach and conservative assumptions used by PartnerRe in developing its Sept. 11 loss estimates are important factors in the stable rating outlook assigned to the ratings, Fitch said. Fitch believes that the property/casualty insurance market will be characterized by rapidly rising prices, diminished capacity and a flight to quality. Fitch further believes that the additional capital positions PartnerRe take full advantage of these hardening market conditions. These positives are partially offset by PartnerRe's core business, which exposes it to low frequency, but high severity events. PartnerRe's recent diversification efforts help to mitigate this effect

Moody's keeps Getronics on review for downgrade, views conversion plan positively

Moody's Investors Service kept Getronic's ratings on review for possible downgrade but noted that an offer to temporarily lower the conversion price for up to 36% of its outstanding convertible bonds would be positive for credit quality if accepted by a sufficient number of holders. A total of $1 billion of debt securities are affected, including the Baa3 bank loan rating and the Ba1 subordinated convertible bond rating.

While the action would be a positive, Moody's said it "is yet insufficient to conclude the rating review without an in-depth analysis of the strategy and business prospects of the company."

The proposed lower conversion price would cut debt by up to €305 million and reduce interest expense by €9.6 million.

"The financial impact of de-leveraging, of a reduction in debt service cost and the addition of headroom under Getronics financial covenants will be clearly positive for the company's profile of financial risk," Moody's commented. "Nevertheless, Moody's will go through its rating review to balance the benefits of the financial restructuring, if implemented, with the challenging operating environment and the need for additional cost savings."

S&P rates new Tech Data convertibles BB+

Standard & Poor's assigned a BB+ rating to Tech Data Corp.'s new convertible subordinated notes due 2021.

S&P rates new Cinergy convertibles BBB

Standard & Poor's assigned a BBB rating to Cinergy Corp.'s planned offering of Feline Prides.

S&P puts Conseco on negative watch

Standard & Poor's put Conseco Inc. on CreditWatch with negative implications.

Ratings affected include: Conseco's senior notes rated B+ and Feline Prides rated CCC+; Conseco Financing Trust I's, Financing Trust II's, Financing Trust V's, Financing Trust VI's and Financing Trust VII's trust preferreds rated CCC+; Conseco Financing Trust III's capital securities rated CCC+; Conseco Financing Trust IV's Feline Prides rated CCC+; and Conseco Finance Corp.'s medium-term notes rated B- and senior subordinated notes rated CCC.

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