S&P puts Comverse on watch

Standard & Poor's placed the ratings of Comverse Technology Inc., including the 1.5% convertible due 2002 at BB, on negative watch, reflecting significant deterioration in profitability.

At July 31, Comverse had $434 million of debt outstanding.

Comverse reported a sharp decline in revenues for fiscal second quarter and expects further softening, S&P noted. Profitability has suffered as well.

Comverse is responding with cost reductions intended to reduce the breakeven quarterly revenue rate of $190 million by 2003. Still, profitability is likely to remain challenged.

The negative impact of diminished profitability on Comverse's financial profile is offset by a $1.8 billion cash balance and net cash position of $1.4 billion, S&P said.

Cash balances are sufficient to withstand a prolonged significant downturn in operating performance and the net cash position will be a limiting factor in any potential rating downgrade, keeping it to a likely one-notch reduction at this stage, S&P added.

S&P puts Georgia-Pacific on watch

Standard & Poor's placed the ratings of Georgia-Pacific Corp. on negative watch, including the convertible rating at BBB-, due to the announced delay in the partial spin-off of its consumer products and packaging business.

The split into two publicly traded companies was postponed due to weak financial and building products market conditions.

Credit measures have been strained since the primarily debt-financed acquisition of Fort James Corp. two years ago, S&P noted, and IPO proceeds were expected to be used to reduce debt.

Barring any new initiatives to bolster credit quality or any significant changes in capital structure, S&P expects to lower Georgia-Pacific's ratings by one notch to non-investment grade and assign a negative outlook.

The company is expected to repay or refinance its significant near-term debt maturities, including a $650 million bridge financing maturing in August 2003, and maintain adequate liquidity. GP also has $1.3 billion of short-term accounts receivable financing due in December.

S&P confirms Legal & General

Standard & Poor's confirmed the long-term AA and short-term A-1+ counterparty credit ratings on Legal & General Group plc following the announcement of a £800 million ($1.24 billion) rights issue.

The outlook is negative.

S&P credit analyst Mark Button said the £786 million of new equity, net of costs, will boost capital adequacy and improve the risk profile of the balance sheet through reduced leverage and increased capacity for hybrid equity issuance.

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