S&P rates Cypress convertibles B-

Standard & Poor's assigned a B- rating to Cypress Semiconductor Corp.'s $500 million convertible subordinated notes and confirmed its existing ratings including its corporate credit at B+. The outlook remains negative.

Cypress' ratings reflect ongoing stresses in the data networking and computing markets and the company's limited financial flexibility, S&P said. Cypress manufactures specialty memory, timing, and logic semiconductors for the networking, wireless, and computing markets.

Cypress has strengthened its product portfolio through internal development and acquisitions. Still, prices have declined about 30% year-on-year, while demand has been volatile, S&P added. R&D expenses have been high, over 30% of sales, contributing to negative operating cash flows. The company has opportunistically repurchased debt, which has reduced its interest obligations and moderately reduced longer-term maturities. At the same time, the repurchases have reduced near-term liquidity, at a time of uncertain business conditions. These factors have all reduced the company's financial flexibility.

Cost-reduction actions have contributed to profitability despite flat sales. The company's EBITDA for the four quarters ended March 31, 2003, was $112 million, or 15% of sales, although the EBITDA margin has exceeded 40% in a stronger business environment, S&P said. Pro forma debt to EBITDA for the four quarters ended March 2003 was about 5x. Recognizing stressed end-markets, the company has terminated some R&D projects and accelerated its cost-reduction efforts, to achieve break-even net income on quarterly revenues of $200 million. Still, the company must balance the ongoing need for long-term product development against its desired financial profile.

Fitch rates American Financial convertibles BBB+

Fitch Ratings assigned a BBB+ rating to American Financial Group's $175 million unsecured senior convertible notes due 2033. The outlook is stable.

Fitch cuts Ameren

Fitch Ratings downgraded the senior unsecured debt rating of Ameren Corporation to A- from A+ and removed them from Rating Watch Negative.

Fitch raised the ratings of Ameren subsidiaries Cilcorp and Central Illinois Light Co. and removed those ratings from Rating Watch Positive.

The outlook is stable.

Fitch said the downgrade of Ameren Corp. is due to an increase in consolidated leverage resulting from the recent merger with Cilcorp.

Consolidated leverage is also expected to increase due to a large, $2.25 billion capital expenditure program at Ameren's largest subsidiary, AmerenUE, which will be financed in part with new debt, Fitch noted. Also, previous ratings did not sufficiently reflect the structural subordination of Ameren Corp's debt to that of its subsidiaries.

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