S&P rates new Flextronics convertible BB-

Standard & Poor's assigned a BB- rating to Flextronics International Ltd.'s $500 million senior subordinated convertible notes due 2010 and confirmed its other ratings including its senior secured debt at BB+ and subordinated debt at BB-. The outlook is stable.

The rating reflects a highly competitive industry and prolonged period of low asset-utilization rates, only partly offset by a top-tier industry position, broad geographic scope of operations and solid long-term customer relationships.

S&P believes it will be an ongoing challenge for Flextronics to maintain operating performance while executing its growth strategy in the midst of a severe downturn in end-market demand, as depressed operating margins of about 4.5% in June are likely to remain pressured.

However, Flextronics' cash flow protection measures are expected to remain solid, with EBITDA coverage of interest expense of more than 5x and debt to EBITDA of about 3x as of June.

Cash flow from operations in the June quarter was $246 million and cash balances increased to $860 million. Combined with full availability under its $880 million revolving line of credit, financial flexibility is adequate, S&P said.

Moody's rates WCI convertible Ba3

Moody's Investors Service assigned a Ba3 rating to the new issue of $125 million of convertible senior subordinated notes of WCI Communities Inc. and confirmed its other ratings including its senior subordinated notes at Ba3. The outlook remains stable.

The outlook reflects Moody's expectation that WCI will continue to maintain capital structure discipline despite the current earnings weakness and notwithstanding its professed desire for geographic expansion.

The ratings acknowledge its valuable land holdings in coastal areas of Florida that have market values exceeding current book values, above-average industry margins, stable balance sheet leverage and a growing equity base.

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