Fitch cuts AEP to BBB

Fitch Ratings lowered the senior unsecured ratings of American Electric Power Co. to BBB from BBB+, noting that leverage was inconsistent with the previous rating. The outlook remains stable.

Fitch said it views positively AEP's plans to decrease leverage and enhance liquidity through a reduction of its common dividend and the sale of non-core assets.

However, AEP will be challenged to execute successful asset sales in the current market environment.

Moody's puts Mirant on review for downgrade

Moody's Investors Service placed the ratings of Mirant Corp. under review for downgrade, including B1 senior unsecured debt and B3 trust preferreds.

The review reflects continuing uncertainty related to the ultimate resolution of significant debt coming due in 2003 and 2004, ongoing concern about operating cash flow relative to high debt, uncertainty about ongoing government investigations and lawsuits related to California's power markets.

Other factors were uncertainty about the ongoing independent auditors review of financial statements for 2000 and 2001 and delays in providing full-year 2002 results.

Moody's said a multiple-notch downgrade is possible.

Moody's confirms Benchmark

Moody's Investors Service confirmed Benchmark Electronics Inc.'s $80 million of 6% convertible subordinated notes due 2006 at B2, noting solid execution and moderately low debt leverage offset by increased customer concentration, which remains a concern. The outlook is stable.

The ratings acknowledge solid operating performance, evidenced by four consecutive quarters of positive net income, Moody's said.

Ratings are supported by improved liquidity with balance sheet cash of $313 million and net cash of $175 million; and reduced debt leverage with debt-to-EBITDA of 1.4 times and debt-to-capitalization a reasonable 22% at Dec. 31.

However, the ratings also consider substantial customer concentration with disproportionately high exposure to the high-end computing segment, which contributed 64% of revenues in 2002.

The ratings could be lowered if revenues decline precipitously, a concern in light of customer concentration.

Moreover, unlike many of its competitors, Benchmark has not indulged in serial restructuring charges.

It will be a challenge for the company to continue to generate cash flow from working capital at this point in the IT spending cycle, but this shouldn't be a concern if margins can be sustained, and even improved going forward, Moody's said.

Moody's puts Corus on review

Moody's Investors Service put Corus Group plc's €400 million senior notes due 2006 and £200 million senior notes due 2008 at Ba2 on review for possible downgrade.

Moody' said the review was prompted by the additional challenges resulting from the rejection of the sale of the aluminum assets by the supervisory board of Corus' Dutch subsidiary, which owns the respective assets to be sold, as well as continued weakness in the group's performance in the U.K. as reflected in the announcement of additional restructuring measures necessary to turn around the group's U.K. steel assets.

The rating action does not incorporate any information to be released at the group's upcoming financial result 2002 presentation, Moody's noted.

Although the cancellation or postponement of the sale is not expected to have an imminent effect on the group's liquidity position, management will have to secure bank support for the time beyond the expiry of the group's main bank loan facility in January 2004, Moody's said. While the headroom under the existing net tangible worth covenant has decreased over the last year due to net losses, availability under the credit line continues to provide sufficient flexibility.

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