Moody's upgrades Innova

Moody's Investors Service upgraded Innova S de RL including raising its $88 million 12 7/8% senior unsecured notes due 2007 to B2 from B3 and confirmed its $300 million 9 3/8% senior unsecured notes due 2013 at B2. The outlook is stable.

Moody's said the upgrade follows Innova's successful issuance of $300 million of new senior unsecured debt and the formal capitalization of shareholder loans and accrued interest totaling approximately $380 million.

Partial repayment of the 2007 notes with proceeds from the new offering will facilitate about US$9 million in annual interest cost savings for the company and extension of the average maturity profile via the longer-dated tenor of the new notes will also render the repayment of the remaining stub notes that much more feasible.

Moreover, equitization of the shareholder loans demonstrates renewed commitment by the company's long-standing sponsors, Moody's said.

More broadly, the ratings also continue reflect Innova's status as the largest pay-TV company in Mexico, its national coverage, the large and growing (again) size of its subscriber base, and good prospects for further near-term growth given current market and competitive conditions, Moody's added.

However, the ratings continue to be constrained by the company's still high financial leverage and weak coverage levels, the competitive market environment, risks associated with a potential acquisition and/or integration of DirecTV's subscribers, and susceptibility to volatile economic conditions and adverse currency exchange rate fluctuations.

S&P rates Jenoptik BB-

Standard & Poor's assigned a BB- long-term corporate credit rating to German engineering group Jenoptik AG. The outlook is negative.

S&P said the rating primarily reflects the group's customer concentration in facility engineering services to the semiconductor industry, which represents about one-third of revenues, as well as the challenging market environment in which the company operates and the group's exposure to cost overruns and delay penalties.

The ratings are further constrained by Jenoptik's weak cash flow generation and high reliance on short-term funding.

These weaknesses are mitigated by Jenoptik's strong position and long track record in the competitive segment of clean-room engineering and by the high level of outsourcing in this field, S&P said. The ratings are also supported by the company's fair geographic diversification and long-term privileged customer relationships.

Jenoptik's financial flexibility is currently weak, with a high reliance on short-term funding, but a refinancing package that is expected to be completed by mid-October 2003 will improve the company's liquidity and will extend the group's maturity profile. The refinancing package will consist of more than €100 million long-term financing and a capital increase of 8.14 million shares.

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