S&P puts AES on negative watch

Standard & Poor's placed its BB corporate credit and senior unsecured debt ratings on The AES Corp. on watch with negative implications, along with the B+ subordinated debt and B convertible trust preferreds. S&P also put the BBB ratings for units IPALCO Enterprises Inc. and Indianapolis Power & Light Co. on negative watch. But S&P affirmed the BBB- ratings for AES Gener SA and Empresa Electrica Guacolda SA, and the BB-rating on Eletropaulo Metropolitana Eletricidade de Sao Paulo SA. S&P said AES's liquidity position is strained.

Substantial devaluation of the Bolivar, which S&P believes to be significantly overvalued, could negatively affect distributions from C.A. La Electricidad De Caracas (B/watch negative), which is one of AES' largest cash flow generating businesses in Venezuela. AES is expecting to get $1.25 billion in cash distributions from subsidiaries in 2002, as well as $300 million in project financing proceeds to go along with $567 million in cash and revolver availability, S&P said. AES has cash needs of approximately $1.75 billion, including interest and construction and equity commitments, in addition to $488 million in refinancing needs.

S&P said it does not believe that even the complete elimination of cash flows from C.A. La Electricidad De Caracas in and of itself would result in a credit crisis at AES. However, substantial diminution of these distributions combined with the current capital market environment could pressure the rating. Furthermore, S&P remains concerned about the economic environment in Latin America as a whole, and the potential for continued negative impacts on distributions from AES's businesses there. Standard & Poor's expects to resolve the watch status over the next two to three months as the impact on parent distributions becomes clearer. Barring other problems, if distributions from C.A. La Electricidad De Caracas appear to be stable, the rating will be affirmed. If distributions from C.A. La Electricidad De Caracas appear to be substantially negatively affected, a one- notch downgrade or negative outlook is possible.

Fitch cuts AES convertibles to B from B+

Fitch Ratings on Friday downgraded The AES Corp.'s senior unsecured debt to BB from BB+, the corporate revolver and ROARS to BB from BB+, senior subordinated debt to B+ from BB, and the convertible junior debentures and trust convertible preferreds to B from B+. The rating outlook for all of the issues listed above is negative, Fitch said, reflecting the company's tight liquidity situation in the next 12 to 18 months and the company's exposure to the Venezuela Bolivar, which started floating freely against the U.S. dollar on Wednesday.

The ratings were placed on negative watch in late December due to concern over the company's lack of short-term liquidity and refinancing of two debt facilities associated with two subsidiaries. In early 2002 the company successfully refinanced or extended maturities of these two financings. FItch said the downgrades reflect high consolidated leverage and high parent company leverage, the challenge of lower profitability from merchant power exposures in the U.S. and U.K. and the parent's investment concentrations in various emerging markets, as well as the benefits of significant portfolio diversification. The ratings also consider recent actions by AES management to tighten controls, conserve cash and reduce strains on corporate liquidity.

AES subsidiaries IPALCO Enterprises, Indianapolis Power and Light, CILCORP and Central Illinois Light Co. were also lowered. Fitch said the outlook for IPALCO and IP&L's is stable, while CILCORP and CILCO were placed under rating watch, evolving, to reflect the pending sale by AES.

Moody's revises Crown Castle outlook to negative

Moody's Investors Service confirmed the ratings of Crown Castle International and its subsidiary, including the B3 rating for the three convertible issues, but changed the outlook to negative. The action, Moody's said is taken in light of the current uncertainty regarding the future demand for wireless tower space and after reviewing with management their current operating plans.

The ratings reflect Crown Castle's solid position in the independent tower industry with a more mature but still attractive tower portfolio, good management and a strong liquidity position, Moody's said, but are tempered by the high leverage of the company and a borrowing structure that spreads substantial debt over several financings.

S&P rates new EOP notes at BBB+

Standard & Poor's assigned a BBB+ rating to EOP Operating LP's recently issued $500 million senior unsecured notes due 2012 and affirmed the ratings on Equity Office Properties Trust and its operating partnership, EOP Operating LP. The outlook is stable.

The rating reflects the company's very strong business position, including a highly capable management and operating infrastructure, and its solid balance sheet structure, S&P said,w hich are tempered by weakening economic conditions, particularly given the portfolio's exposure to many challenged property markets, and the uncertain impact this may have on portfolio fundamentals and capital availability.

Moody's rates new Lear convertible at Ba1

Moody's Investors Service assigned a Ba1 long-term debt rating to Lear Corp.'s $200 million senior unsecured zero-coupon convertible due 2022, reflecting the company's leading market position as a global supplier of automotive interiors, offset by high financial leverage stemming from multiple debt-financed acquisitions, culminating in the $2.3 billion acquisition of United Technologies' automotive operations. The outlook is negative.

With the UT automotive operations acquisition, Moody's noted that Lear's debt levels peaked in third quarter 1999, weakening debtholder protection measures. However, driven by a tightening of capital expenditures and reductions in working capital, debt protection measures have shown steady improvement since and should continue to do so in 2002 despite the challenging environment.

The negative outlook reflects Moody's industry-wide concern for further volume reductions both in North America and Europe. The rating agency expects, however, that Lear has the potential to outperform other automotive suppliers due to its increasing content per vehicle, new award backlog and high variable cost structure.

S&P puts Nvidia on negative watch

Standard & Poor's put Nvidia Corp. on CreditWatch with negative implications. Ratings affected include its $300 million 4.75% convertible subordinated notes due 2007 rated B-.

S&P cuts CellStar to SD

Standard & Poor's downgraded CellStar Corp.'s corporate credit rating to SD from CCC- and removed the rating from CreditWatch. It also cut CellStar's $130 million 5% convertible subordinated notes due 2002 to D from C and confirmed its $135 million revolving credit facility due 2002 at CCC-.

S&P said the downgrade is in response to the completion of CellStar's exchange of its convertible subordinated notes due October 2002 for securities having a total value that is materially less then the original issue.

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