S&P puts Interpublic Group ratings on watch, negative

Standard & Poor's on Wednesday placed it's A- senior unsecured and BBB+ subordinated debt ratings, and other ratings, for The Interpublic Group of Cos. Inc. on watch with negative implications due to the uncertain climate for ad spending for the remainder of this year and into 2002. S&P said it expects that any downgrade would be limited to one notch.

Previous concerns about a soft advertising environment and general economic slowdown have intensified following the tragic Sept. 11 events, S&P noted. It is unclear to what extent advertising and marketing budgets will be affected, added S&P, such as if new campaigns will be delayed and whether or not ads will be cancelled, postponed or reworked. Still, weaker business trends could hamper Interpublic's prospects for revenue and earnings growth and reducing debt in the near term.

Moody's puts all Enron obligated debt on review for downgrade

Moody's Investors Service placed all the long term debt obligations of Enron, which comes to around $13 billion, on review for downgrade following the announcement by Enron of significant write-downs and charges, reflecting substantially reduced valuations in several of its businesses. These actions affect Enron's broadband operations, its merchant portfolio and the Azurix water company holdings.

Moody's downgrades Hexcel sr sub notes to Caa1 from B2

Moody's Investors Service downgraded Hexcel Corp., affecting $758 million of debt securities. Among the ratings cut are the company's $340 million of 9¾ % senior subordinated notes due 2009 to Caa1 from B2; its $47 million of 7% convertible subordinated notes due August 2003 to Caa2 from B3; its $26 million of 7% convertible subordinated debentures due August 2011 to Caa2 from B3; and its $345 million of senior secured bank facilities to B2 from Ba3. The outlook remains negative.

Moody's said the downgrade is the result of "severely deteriorating business fundamentals of the airline industry and the attendant cancellation and deferment of new aircraft orders." Hexcel recently announced it anticipates 2002 commercial aerospace revenue will decline around 20%, Moody's noted.

The rating agency added: "The projected decline in business level will further stress the company's already weak operating results and highly levered balance sheet. Total debt, net of cash, at the end of the second quarter was $704 million against book equity of $286 million, with goodwill and other intangibles at $387 million. The company indicated that for the third quarter EBITDA, before business consolidation expense, will be in the range of $25 to $28 million. This would result in pro forma EBITDA to interest expense coverage of about 1.5x to 1.6x versus the 2.0x level in 2000. The company further indicated that it has made some moderate reduction in net debt as working capital was brought down."

Moody's said it is concerned that the company's liquidity position is "tight and financial flexibility strained."

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