S&P rates Dominion notes BBB+

Standard & Poor's assigned BBB+ ratings to Dominion Resources Inc.'s $300 million series D senior unsecured notes due 2013 and $300 million series E senior unsecured notes due 2033.

The ratings are supported by cash flow stability, favorable regulation and an average business profile. Cash flow stability is also provided by the state-regulated local gas distribution businesses, as well as FERC-regulated gas pipelines.

Strengths are offset by the higher-risk nature of the integrated energy strategy, heavy capital requirements in the E&P business, regulatory uncertainty beyond 2007 and financial measures that are currently weak for the rating.

Adjusted debt-to-total capital at year-end 2002 declined to 58% and funds from operations interest coverage improved to 4.2x.

In early 2002, S&P identified Dominion as vulnerable to contingent claims due to ratings triggers and since then liquidity has been improved the triggers eliminated, S&P added.

The company has $2 billion in bank loan revolvers to back its commercial paper program. Furthermore, despite a tightening of capital for energy merchants, Dominion maintains good relationships with banks and has demonstrated its continued access to capital markets.

Dominion has $1 billion in debt maturities coming due in 2003, which the company expects to refinance. Another $1 billion in debt maturities are spread out in 2004 and 2005.

The outlook is stable outlook, conditioned on management's commitment to improving and sustaining better cash flow interest coverage in 2003 and 2004, S&P said.

Fitch ups Nextel outlook

Fitch Ratings revised the outlook on Nextel Communications Inc. to positive from stable on its ratings, including senior unsecured debt at B+, senior secured bank facility at BB and preferreds at B-.

The revised outlook reflects a view that favorable financial and operating trends will continue over the next several quarters based on positive momentum from cost containment, lower churn rates and debt repurchases.

Even though Fitch expects Nextel's positive operating trends to continue in 2003, challenges and risks remain that could moderate the pace of anticipated credit profile improvement, including competitive pressures and the weak economic environment.

Moody's puts WPP on review for downgrade

Moody's Investors Service put the ratings of WPP's Group plc, including the Young & Rubicam Inc. 3% convertible due 2005 at Baa1, on review for possible downgrade, due to concerns about weakened debt protection measures.

Given the uncertain outlook for WPP's businesses and with future free cash flows likely to be absorbed by earn-out payments, acquisitions and share buybacks, Moody's is concerned that debt levels might well not reduce and debt protection measures not improve meaningfully in the near term.

The agency said it expected the extent of any potential downward to be limited to one notch.

S&P confirms Ford ratings

Standard & Poor's confirmed the ratings of Ford Motor Co. (BBB/negative/A-2) and subsidiaries in response to market rumors suggesting that a rating downgrade is pending.

Overall financial leverage is aggressive, taking into account the total unfunded pension liability that increased to $15.6 billion at year-end 2002 from $2.5 billion at year-end 2001. S&P estimates Ford's unfunded retiree medical liability is now well over $23 billion.

Servicing of these liabilities will be a significant ongoing draw on financial resources, although automotive cash flow, supplemented by dividends from Ford Credit, should be sufficient to cover benefit plan contributions and capital spending for the next few years.

Despite the negative outlook, the current ratings reflect the assumption that as a result of its restructuring measures, Ford will be able to continue showing broadly improving financial results in its global automotive operations, even if industry conditions in the U.S. deteriorate further, S&P said.

In this regard, S&P views Ford's achieving management's target of breakeven pretax automotive earnings in 2003, compared with a loss of $622 million in 2002, as an important benchmark.

Moody's ups Vodafone outlook

Moody's Investors Service changed the long-term rating outlook on Vodafone Group plc and subsidiaries to stable from negative and affirmed the A2 long-term and the Prime-1 short-term ratings.

The change reflects clarification on the total amount invested by Vodafone in connection with its increased equity stake in Cegetel Groupe SA.

As a result of Vivendi Universal SA utilizing its preemption right, Vodafone only acquired SBC's 15% economic interest in Cegetel at a cost of €2.3 billion and not the larger BT Group Plc stake, which Vivendi acquired at a cost of €4 billion.

Another previous concern had been the proportionately high level of subsidiary debt. Vodafone's recent repurchase of about €3.6 billion of bonds and €500 million of bank term loans at the subsidiary level has significantly remedied this issue, with the current maturity schedule expected to further remedy structural subordination, Moody's said.

S&P cuts AEP ratings

Standard & Poor's lowered the ratings if American Electric Power Co. Inc., including senior debt from BBB+ to BBB-, following the large writeoffs recorded in fourth-quarter.

The outlook is now stable.

Although the company has taken necessary near-term steps to address the effect of the writeoffs, it was insufficient to produce a credit profile that supports a BBB+ rating.

AEP has improved its liquidity and balance sheet by refinancing over $2 billion in utility debt, extending the terms of bank credit facilities and issuing over $1 billion of equity, which was instrumental in achieving a stable outlook.

At Dec. 31, AEP had about $1 billion cash on hand and a commercial paper program backed by $3.5 billion in bank facilities, of which $1 billion matures in May 2005. The credit facilities contain various covenants that require it to maintain certain leverage and financial measures.

S&P cuts Interpublic senior debt to junk

Standard & Poor's lowered The Interpublic Group of Cos. Inc. senior unsecured debt to BB+ from BBB- and subordinated debt to BB from BB+.

The ratings remain on negative watch.

The downgrade was based on recent record of weak profitability and higher debt to EBITDA, and the likelihood that restoring earnings prospects and a financial profile in line with prior ratings could take longer than anticipated.

Liquidity is derived from borrowing availability of about $875 million under credit facilities at Dec. 31, which includes an undrawn $500 million revolver maturing in May 2003 and a $375 million credit facility due in 2005.

Key financial covenants in the credit agreements include maintaining greater than 3.5x interest coverage and less than 3.5x debt to EBITDA.

Term loan agreements also contain covenants related to minimum net worth, cash flow to borrowed funds and maximum levels of borrowed funds to net worth.

Interpublic received a commitment for a $500 million interim credit facility, available as of May 15, 2003, and maturing by July 31, 2004. In addition, the company had $326 million in borrowings under uncommitted lines of credit at Sept. 30, 2002, that are repayable on demand.

Alternate sources of liquidity include the sale of non-core assets, such as NFO Worldwide, which is in the process of being sold. Still, asset sales alone are not likely to provide sufficient liquidity.

Dividend reductions could result in a meaningful debt paydown, but also would be insufficient alone to bridge liquidity needs, S&P said.

The company's obligations do not contain ratings-based or stock price triggers that accelerate debt repayment but the 0% convertible senior notes due 2021 are convertible if the credit rating falls below BB+. The issue is putable Dec. 14, 2003, at the accreted value of $587 million.

Moody's puts EchoStar on review for upgrade

Moody's Investors Service placed the ratings for EchoStar Communications Corp. on review for possible upgrade, including the 4.875% convertibles due 2007 and 5.75% convertibles due 2008 at Caa1.

The potential upgrade reflects a belief that EchoStar's credit profile may have improved enough to warrant less speculative ratings and specifically that the previous developing outlook is no longer appropriate following regulatory blockage of its proposed merger with Hughes.

Also, Moody's noted strong remaining liquidity position after payment of the breakup fee related thereto, and further evidence of continued strength in operating performance of late and as expected.

Moody's confirms Teck Cominco

Moody's Investors Service confirmed Teck Cominco Ltd. and Teck Cominco Metals Ltd., ending a review for possible downgrade. The outlook is stable. The action affects $654 million of debt including Teck Cominco's senior unsecured notes at Baa3, 3.75% convertible subordinated debentures at Ba1, 3% subordinated debentures exchangeable for Inco shares at Ba1 and Teck Cominco Metals' senior unsecured 6.875% notes at Baa3.

Moody's said the confirmation reflects its view that Teck's contribution of its 100% owned coal assets, principally the Elkview coal mine and coal reserves, to the Fording Coal Partnership will have at worst a neutral and potentially a positive impact on the company's overall earnings performance and cash flow generation ability.

The rating action also acknowledges the operating strengths of Teck's other businesses in zinc, metal smelting and refining, copper and gold.

However, the rating considers the slow recovery in the zinc market and Moody's expectation for continued price volatility in zinc and copper, which will again pressure earnings and cash flow performance in 2003.

The stable outlook reflects Moody's expectation that price deterioration in the zinc market is largely complete although recovery will be slow.

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