Moody's cuts Provident ratings

Moody's Investors Service downgraded the long-term debt ratings of Provident Financial Group Inc. including cutting its senior debt to Ba1 from Baa3, trust preferreds to Ba2 from Ba1 and Provident Bank's senior debt to Baa3 from Baa2 and subordinated debt to Ba1 from Baa3. The outlook is stable.

The action concludes a review for possible downgrade that commenced on March 5 in which Moody's focused on the adequacy of restated core earnings in providing protection to creditors related to the current risk profile.

The downgrade was based on a view that financial protection was weaker because the lower restated core earnings were not fully compensated by improvements in Provident's risk profile, Moody's said.

Provident's change in business mix away from national business lines to local retail banking was positive, but it will likely take some time before the change will result in improved core earnings.

Moody's expects Provident's risk profile to improve, but asset quality indicators to remain weaker than average.

Fitch rates Southern Union mandatory BBB

Fitch Ratings assigned a BBB rating to Southern Union Co.'s new 5.75% mandatory convertibles. The outlook is stable.

Proceeds will be used to repay bank debt and fund a portion the pending acquisition of Panhandle Eastern Pipeline Co.

Fitch views the mandatory as providing significant equity-like flexibility to Southern Union's capital base.

The rating incorporates recent revisions to the terms the pending acquisition of Panhandle from CMS Energy Corp., lowering the purchase price to $1.74 billion from $1.83 billion and termination of the proposed $150 million non-voting preferred stock investment by AIG Highstar Capital LP.

Although Southern Union's initial cash outlay for the purchase has increased by about $70 million to $584.3 million, it is more than covered by $420 million of cash proceeds received from the sale of its Texas gas utility division earlier this year and proceeds from the convertible.

In addition, a concurrent stock offering could provide more then $125 million of additional cash proceeds for de-leveraging.

As a result, consolidated pro forma credit measures should strengthen to levels consistent with the ratings, with total debt to capital stabilizing in the mid-55% range and EBITDA to interest coverage exceeding 3x, Fitch said.

Moody's puts Jones Apparel on review

Moody's Investors Service placed the Baa2 long term debt rating of Jones Apparel Group Inc. on review for possible downgrade, based on risks associated with the termination by Jones of the Lauren licensing arrangement.

Moody's said it is concerned that the potential negative impact of this loss of revenue could materially affect the operating cash flow and debt protection measures of Jones.

The review will focus on how Jones intends to replace the $550 million revenue stream that Lauren has generated, steps that Jones plans to take to absorb overhead associated with the Lauren brand and the ability of other businesses to offset the sales and earnings lost.

Jones and Polo Ralph Lauren have both filed lawsuits regarding Jones' license to produce apparel under the Lauren brand name.

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