S&P confirms XL Capital

Standard & Poor's confirmed XL Capital Ltd.'s counterparty and senior debt ratings at A+ and assigned an A- rating to its new series A ordinary preference shares callable after 2007. The outlook is stable.

S&P said the ratings reflect XL Capital's extremely strong capital adequacy, very strong market position, and diversified earnings stream as well as the strong financial leverage of XL Capital and its reinsurance subsidiaries.

Partially offsetting these strengths are XL Capital's prospective execution risk, earnings uncertainty, and capital management, as operational restructuring strategies remain active, S&P added.

S&P noted that XL Capital will use proceeds from the preference shares "as needed," potentially including payment of any LYONs put back to the company.

S&P confirms Fubon

Standard & Poor's confirmed the ratings on Fubon Group and Taipeibank including the BBB rating on Fubon's $430 million convertible. The outlook remains stable.

S&P's confirmation is in response to the announcement that Fubon Financial Holding Co. Ltd will acquire Taipeibank.

S&P said Fubon's ratings already incorporated potential banking acquisitions.

Taipeibank, with its established franchise, will likely reinforce the group's market position in Taiwan, S&P added.

Using a share swap for the acquisition means that Fubon FHC's double leverage, defined as parent equity investments in subsidiaries divided by total shareholders' equity, will remain within tolerable limits, S&P said.

Moody's says no action on Ford imminent

Moody's Investors Service said it does not anticipate any imminent rating action on Ford Motor Co. or Ford Motor Credit Co. Ford Motor Co.'s senior debt is rated Baa1.

Moody's noted the outlook on both companies is is negative due to the considerable competitive pressures facing Ford and the relatively protracted time frame that it will take (2003/2004) before material operational and financial benefits of the company's restructuring program can be realized.

Moody's added that it will closely and regularly monitor the company's progress in implementing the plan and reestablishing a more competitive operating and business model.

In order to forestall any further pressure on the rating Ford must show that the overall trend in achieving these plan objectives is clearly positive, Moody's added.

Moody's said Ford's considerable liquidity position - cash and VEBA of $25 billion versus $19.5 billion of debt with a 28-year average maturity - should provide the company with a critical financial cushion as it attempts to implement this plan.

S&P says will likely raise Orbital Sciences

Standard & Poor's said Orbital Sciences Corp. remains on CreditWatch with developing implications but that its ratings will likely be raised after it successfully closes its offering of $135 million of units. Orbital Sciences' corporate credit rating is CCC+.

Moody's confirms Conseco

Moody's Investors Service confirmed Conseco, Inc. but lowered its preferred stock, affecting a total of $5.6 billion of securities. Ratings affected include Conseco's guaranteed senior notes at Caa2, its old senior notes at Caa3, its trust preferreds at Ca and its preferred stock, lowered to C from Ca. The outlook is developing.

Moody's said its action follows Conseco's announcement that it intends to delay upcoming bond interest payments and pursue a capital restructuring at the parent company level.

Conseco's preferred stock rating was lowered to reflect Moody's expectation that preferred stock holders will have little, if any recovery value in a capital restructuring.

Moody's said its ratings already reflected its belief that Conseco's future beyond October 2002 rested "on a radical change in the company's capital structure."

Therefore few adjustments are currently warranted, Moody's added.

Going forward, Moody's said Conseco must improve the claims paying ratings of operating insurance subsidiaries in order to continue to sell new business and maintain stable levels of surrender and lapse activity. In addition, the rating agency noted that action by insurance regulators on behalf of policyholders could limit the ability of the insurance subsidiaries to provide dividends to the holding company.

Moody's also said it believes the company's previous strategy of selling or reinsuring blocks of insurance business will serve to erode its franchise value.

Finally, Moody's cautioned that the more harsh and volatile capital market conditions of late create additional uncertainty and could further constrain the operating earnings of Conseco and the financial flexibility of the holding company.

S&P cuts Conseco

Standard & Poor's downgraded Conseco Inc.

Ratings lowered include its notes, cutting its senior notes to CC from CCC+ except for its $250 million 6.4% notes due 2003, $800 million 8.75% notes due 2004, $14.936 million 6.4% notes due 2004 guaranteed by CIHC, Inc. and $366.294 million 8.75% notes due 2006 guaranteed by CIHC which were lowered to D from CCC+.

Fitch cuts Conseco

Fitch Ratings downgraded Conseco Inc. including lowering its senior notes to C from CCC, its preferred stock at C from CC and its trust preferreds to C from CC.

Fitch said the action follows Conseco's announcement it will pursue a debt restructuring and has exercised its 30-day grace period on upcoming bond interest payments.

The C rating indicates imminent default, Fitch noted.

If the company does not cure the delayed interest payments within the grace period, the affected instruments will be downgraded to the 'Default' category, Fitch said.

Even if the delayed interest payments are cured, Fitch added that it believes any debt restructuring would be classified as a distressed debt restructuring under Fitch's definition and therefore warrant a 'Default' rating.

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