Moody's puts Abitibi on review

Moody's Investors Service put Abitibi-Consolidated Inc. on review for downgrade including its senior unsecured notes and debenturesat Ba1, Abitibi-Consolidated Finance LP's guaranteed notes at Ba1, Abitibi-Consolidated Co. of Canada's guaranteed notes at Ba1 and Donohue Forest Products Inc.'s guaranteed senior notes at Ba1.

Moody's said that Abitibi's financial performance remains stressed by the continuing difficult operating environment for newsprint producers despite recent improvements in pricing.

Although the company will benefit from a recently instituted price increase, the third increase in the past year, Moody's said it sees limited prospects for further improvements in the near term, as newsprint demand remains sluggish and the strengthening Canadian dollar offsets much of the increase.

Hence, free cash flow is expected to remain negative in the near term and Abitibi's ability to reduce debt is limited, Moody's added.

S&P rates Petrocommerce notes B

Standard & Poor's assigned a B rating to the loan participation notes to be issued by Standard Bank London Holdings plc to finance a loan to OJSC Commercial Bank Petrocommerce.

Petrocommerce's ratings reflect its ownership by Lukoil OAO (BB/stable), S&P said.

The bank's credit profile is also enhanced by its good capital base and adequate liquidity position.

These positive factors are offset by the bank's relatively weak earnings profile and large single-party concentrations in the Lukoil group, S&P added.

S&P rates Indosat notes B+

Standard & Poor's assigned a B+ rating to P.T. Indonesian Satellite Corp. Tbk.'s proposed $200 million seven-year senior unsecured notes due 2010 to be issued by Indosat Finance Co. BV.

S&P said the rating reflects material country risks, growing competition in the wireless and international markets, regulatory uncertainties and the risk of further rupiah depreciation.

However, these factors are offset by a degree of insulation from sovereign debt risks, Indosat's position as one of the leading telecom operators in Indonesia and robust domestic wireless growth prospects.

Cellular operators are now facing new competition from the fixed wireless services, which have similar mobility and features as local cellular services but are offered at local call rates, S&P said.

Although the rollout of fixed wireless service remains limited, S&P said it is concerned about the potential degree of cannibalization, given its low tariffs.

As well as competition in wireless, the international dialing arena is in transition as it is open for limited competition between Indosat and state-owned incumbent P.T. Telekomunikasi Indonesia following early termination of their exclusivity rights to operate in each other's segments.

Indosat's leverage is moderate, with net debt to net capital of 33% and net debt to annualized EBITDA of 1.3x in the first half of 2003, S&P said. These levels are expected to rise to more than 40% and about 2x, respectively, in the near-to-medium term in light of its major expansion program.

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