S&P upgrades Lukoil

Standard & Poor's upgraded Lukoil OAO including raising LukInter Finance BV's $350 million convertible debt due 2003 and $350 million 3.5% convertible bonds due 2007 to BB from BB-. The outlook is stable.

S&P said the action recognizes the general improvement in the operating and fiscal environment for Russian oil companies and, following clarifications of Lukoil's financial policy, reflects S&P's expectation that the group will keep credit ratios in line with its new rating in a mid-cycle scenario assuming a Brent price at $18 per barrel.

The rating is supported by Lukoil's historically sound cash flow generation, management's ongoing measures to improve overall cost structure and a focus on increasing exports and returns, S&P added.

Lukoil's rating reflects its standing as Russia's second largest oil company in terms of production and exports (largest by reserves), tempered by its moderate costs structure and leveraged financial profile.

Moody's confirms Cameco

Moody's Investors Service confirmed Cameco including its C$100 million debentures due 2006 and C$50 million debentures due 2006 at Baa1 and $125 million 8.75% COPrS at Baa2. The outlook is stable.

Moody's said the confirmation completes a review begun in response to the potential impact from the severe flooding at the company's flagship McArthur River mine site, which commenced in April 2003.

The confirmation reflects the fact that: Cameco was able to control the flooding and return the mine to operating status in a lesser time than originally anticipated; there has been no material denigration to its reserve base and mine development position; there has been no lasting environmental issues resulting from the flooding; and the potential cost increase for future mine development and ongoing operations at McArthur is indicated to be manageable, Moody's said.

In addition, the rating confirmation considers that Cameco was able to meet its delivery profile from inventory on hand and/or market purchases and the ultimate net income impact of approximately C$25 million is manageable within the company's earnings profile for 2003.

The rating also acknowledges the improved fundamentals in the uranium industry and strengthening of U3O8 prices, which Moody's expects should begin to flow through to Cameco in 2004, although increases in average price realizations for the portfolio as a whole might lag somewhat as prior high price contracts expire and lower price contracts increase in percentage size.

The stable outlook reflects Cameco's strong position within its industry, steady customer base, low cost position and Moody's expectation that earnings and cash flow from the company's fundamental business will improve going forward reflective of the improved market fundamentals. The outlook also considers Cameco's improved liquidity position following the recent convertible subordinated debenture issue, proceeds of which were used to repay short term debt incurred for the Bruce Power investment, and the minimal debt maturity profile until 2006.

S&P rates New Century convertibles B+

Standard & Poor's assigned a B+ rating to New Century Financial Corp.'s $210 million convertible senior notes due 2008. The outlook is stable.

S&P said the ratings reflect New Century's improved cash flows and income, adequate liquidity and reasonable leverage.

Additional factors include the company's position in the nonprime residential mortgage market and minimal interest rate risk.

Offsetting these factors are New Century's limited history of stable earnings, the company's dependency on wholesale funding, rapid growth in the business, the transactional nature of revenue, the company's monoline business profile and the high level of residual assets on its balance sheet, S&P added.

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