Moody's cuts Elan senior debt to Ba2

Moody's lowered the debt ratings of Elan Corp. plc, including its senior guaranteed debt to Ba2 from Baa3 and subordinated guaranteed debt to Ba3 from Ba1, reflecting weak operating cash flow from sales together with the expectation that cash flow generation will remain modest relative to the company's high debt levels.

The ratings remain under review for possible further downgrade because of uncertainties associated with the current SEC investigation into Elan's accounting practices. Until the investigation is concluded, Moody's believes that Elan's ability to access new funds for business development activities or debt refinancing could be limited.

Other factors could also pressure the ratings, such as, poor product performance, asset impairment charges, or significant depletion of balance sheet cash for acquisitions. Moody's said cash balances, asset valuation and sources of cash flow will be critical to Moody's continuing to monitor Elan's credit ratings.

Fitch revises Nextel outlook to negative

Fitch Ratings changed its outlook on Nextel Communications Inc. to negative from stable on the company's B+ senior unsecured, BB senior secured bank facility and B- preferred stock ratings.

The outlook reflects Fitch's concern of Nextel fully executing its strategic objectives in 2002/2003 and accelerating its operational performance improvement to meet several challenges.

While current financial and operating performance is encouraging, the company must make steady progress toward free cash flow positive by early 2004. This is especially important due to a rapidly increasing debt service beginning in 2003 that could put pressure on liquidity absent strong cash flow progress.

Fitch said the company should also consider debt pay-down as a priority as a means to enhance cash flow and improve overall credit quality.

Concerns are partially mitigated by Nextel's adequate near-term liquidity position, which reflects $3.5 billion in cash at the end of 2001 and $1.5 billion remaining on its bank facility, a unique and differentiated offering to moderate pressure on ARPU and a high quality subscriber base.

Resolution of the negative outlook, Fitch said, requires the company to execute its operational and financial targets over the next several quarters and materially improve credit protection measures, among other things.

Moody's rates new Ace notes at A2

Moody's assigned an A2 rating to ACE Ltd.'s $500 million senior notes offering. The outlook for the rating is stable.

Moody's said the rating is based on the organization's diversified earnings and risk profile, given its international spread of risk in insurance and reinsurance, and on its competitive strength in most of its chosen markets, sound capitalization and financial fundamentals and experienced senior management.

These strengths are tempered by challenges associated with managing a complex international organization, by the holding company's debt leverage, and by the inherent volatility of some of ACE's business lines.

Moody's confirms Devon Energy senior debt at Baa2

Moody's confirmed the senior unsecured debt ratings of Devon Energy Corp., Baa2 senior unsecured rating, the Ba1 preferred stock rating, and its subsidiaries as the company plans a $700 million senior debenture issue.

Proceeds from the new issue will be used to repay the $3 billion credit facility, which was used to fund the acquisitions of Anderson Exploration and Mitchell Energy.

The ratings outlook for Devon and its subsidiaries remains negative, reflecting challenges the company will likely face in reducing its heavy debt burden during 2002.

The confirmation of the rating assumes the company will continue with its plans to sell about $1 billion in assets and that those proceeds will be used to repay debt.

Moody's expects Devon to make significant progress in assets sales during 2002 and said the stability of the rating is largely dependant on Devon's success in reducing leverage to a level consistent with a Baa2 rating.

S&P cuts Metromedia to D

S&P lowered the corporate credit rating on Metromedia Fiber Network Inc. to D, based on the company's missed interest payment on its $975 million of 6.15% subordinated convertible notes issued to Verizon Communications Inc. The rating on the notes was also lowered to C and placed on watch with negative implications.

The company has indicated that it may seek Chapter 11 bankruptcy protection if it is unable to restructure its debt. White Plains, New York-based Metromedia's total debt outstanding at Feb. 28 was about $3.3 billion and total unrestricted cash was about $37.3 million.

The rating on the unsecured notes will be lowered to D on default of the interest payments, a bankruptcy filing or a restructuring, the last of which would be considered tantamount to default, S&P said.

Moody's puts Foot Locker on review for upgrade

Moody's placed the ratings of Foot Locker Inc., including the B2 rated $150 million convertible subordinated notes due 2008, on review for possible upgrade.

The review will focus on the risks and benefits of Foot Locker's business strategy and financial policies, including its ability to finance its store strategy from internally generated cash flow and withstand the inevitable shifts in consumer demand.

Foot Locker's current management team has focused on cash generation and carefully managed growth for the past two years, resulting in lower leverage and a significantly improved liquidity position. However, Moody's expects they will grow their franchise in the future.

S&P rates new Dominion Resources DECS at BBB+

Standard & Poor's assigned a BBB+ rating to Dominion Resources Inc.'s new offering of $300 million upper DECS.

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