S&P says HealthSouth still in default

Standard & Poor's said its ratings on HealthSouth Inc. remain at D in response to the company's announcement it will pay all past-due interest, totaling $117 million.

Despite recent interest payments, HealthSouth is still in default on its convertible debt, which has $344 million of principal owing, S&P said.

Fitch cuts Telefonica de Argentina, Cointel

Fitch Ratings downgraded the foreign and local currency senior unsecured ratings of Telefonica de Argentina SA and its holding company Compania Internacional de Telecomunicaciones SA (Cointel) to DD from C.

Fitch said the actions reflect the recent completion of the debt exchange offer by TASA and Cointel.

Fitch viewed the debt exchange as distressed under the terms of the offering. As a distressed debt exchange, the existing TASA and Cointel notes included in the offer are considered in default under Fitch's rating methodology upon completion of the exchange. No ratings have been assigned to the newly issued TASA notes.

The successful completion of the debt exchange is positive for TASA as it has lengthened debt maturities and for Cointel as it has reduced the amount of notes held by third parties maturing during 2004, Fitch said.

However, TASA and Cointel still face significant debt maturities over the next year. TASA faces the maturity of approximately $81 million in outstanding senior notes due 2004 while Cointel faces the maturity of $225 million series A notes due 2004 and Ps175 million series B notes due 2004, Fitch said. After the debt exchange, a large portion of the Cointel notes are held by indirect parent company, Telefonica Internacional. The remaining portion of the notes, approximately $110 million in outstanding 8.875% series A notes due 2004 and 10.375% series B notes due 2004, continue to be held by third party noteholders.

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