S&P cuts GATX to BBB-

Standard & Poor's lowered the ratings of GATX Corp. and its principal operating subsidiary, GATX Financial Corp., including the 7.5% convertibles due 2007 to BBB- from BBB.

The outlook is stable.

The downgrade is based on weak earnings performance, which is not expected to recover significantly over the near-to-intermediate term, S&P said.

As a result, credit measures, which have been under pressure since 2000, are expected to remain relatively weak for the foreseeable future.

While railcar leasing performance has begun to show signs of improvement, aircraft leasing business could see more weakness because of the continuing airline recession.

In December, GATX announced plans to sell GATX Ventures and curtail investment in specialty finance, which should help credit measures over the longer term.

Liquidity is adequate, with $231 million of unrestricted cash at Dec. 31 and funds from operations sufficient to meet capital spending needs and debt maturities over the intermediate term, S&P said. The company had $778 million available on three unsecured revolving credit facilities that mature through 2005 at Dec. 31.

At Dec. 31, 2002, the ratio of earnings to fixed charges as defined by the credit facilities was 1.6x, in excess of the requirement of 1.3x.

Debt maturities in 2003 are $643 million and, in 2004, $365 million. The company also has the ability to reduce capital spending if conditions warrant, as evidenced by the reduced level in 2001 and 2002.

Moody's confirms Loews

Moody's Investors Service confirmed the ratings and outlook of Loews Corp., including its convertibles at Baa1, following news of its intended acquisition of Texas Gas Transmission Corp. from The Williams Cos. Inc.

The action reflects steady and relatively predictable nature of cash flows of Texas Gas and further diversification of cash flow, Moody's said.

However, Moody's said that in swapping over $500 million of almost risk-free marketable securities for a riskier operating asset, Loews has weakened its credit profile to some extent. Additionally, in adding roughly $500 million of debt at the TGT level, Loews' has increased somewhat the structural subordination of its bondholders.

Still, Moody's expects that Loews' will use dividends received from its portfolio of companies to bring back its levels of cash and marketable securities to levels reached before the acquisition of TGT within a relatively short period of time.

Loews' ratings reflect significant level of cash and marketable securities and diversity, but also significant weight from tobacco subsidiary, Lorillard, and the support that in the past Loews has had to extend to its insurance subsidiary, CNA.

At the end of 2002, Loews' investment in marketable securities (including at 100%-controlled Lorillard) was $4.1 billion. Its debt was $2.4 billion. The free cash flow Lorillard contributes each year is approximately $600 million a year

Texas Gas senior debt is rated B3 and on review for possible upgrade.

The outlook remains negative reflecting Moody's concerns that litigation risk remains significant for Lorillard.

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