Fitch cuts Duke

Fitch Ratings lowered Duke Energy Corp., Duke Capital Corp. and the utility units.

Duke Energy senior unsecured debt, including the mandatory convertibles, was cut to A- from A.

The outlook for all the Duke entities remains negative.

The downgrades reflect the credit impact that consolidated profits in 2002 and particularly 2003 will be well below previous expectations, Fitch said.

Given the revised earnings forecast, credit protection measures will be weaker but consistent with the new ratings.

While recently announced reductions in capital expenditures in 2003 and 2004 will ease external financing requirements, the company is relying on asset sales to fund a portion of capital expenditures in 2003.

Even with assets sales, some new debt financing will be required at parent Duke Energy, but with an overall reduction in consolidated debt, Fitch said.

From a liquidity perspective the Duke Energy group is relatively well positioned, but a majority of available borrowing capacity is at Duke Capital.

The company is in the process of addressing this situation by arranging for an additional liquidity source at Duke Energy and lowering the amount of Duke Energy's permanent commercial paper outstanding to $650 million from the current level of $900 million.

Moody's puts Georgia-Pacific on review

Moody's Investors Service put Georgia-Pacific Corp. on review for downgrade, affecting $9 billion of debt including its senior unsecured notes, debentures and industrial revenue bonds at Ba1, G-P Canada Finance Co.'s notes at Ba1 and Fort James Corp.'s senior unsecured notes, debentures and medium-term notes at Ba1.

Moody's said the action follows Georgia-Pacific's disclosure of increased asbestos costs and weak business conditions in its building products division, increased price competition in its consumer products segment and higher raw material costs.

Georgia Pacific experienced higher asbestos costs in 2002, contributing to the need to record an additional $315 million charge for asbestos costs, and indicating the underlying uncertainty associated with asbestos litigation, Moody's noted.

Further, operating conditions in many of its key building products and consumer markets remain very competitive, making it difficult to achieve anticipated debt reduction, the rating agency added.

Moody's cuts Read-Rite

Moody's Investors Service lowered Read-Rite Corp.'s 6.5% convertible subordinated notes due 2004 to C from Caa3, based in part on a deterioration in operating performance and a dire liquidity position.

With Read-Rite's prospects as a going concern highly questionable, Moody's now believes that recovery of any principal on the $19.2 million outstanding convertibles is unlikely.

The ratings outlook is negative.

The downgrade takes into account total liabilities of $163 million, including $55 million of debt and capital leases, that would be senior to the outstanding convertible.

The company's $42 million working capital deficit after its having incurred a $231 million operating loss in fiscal 2002 led its auditor to express substantial doubt over the ability to continue as a going concern, Moody's noted.

Moody's would reconsider the downgrade restoration of substantial cash balances to support this capital intensive activity. Support from any of Read-Rite's major customers, in the form of an affiliation or a bridge loan, would additionally warrant review.

S&P puts Pioneer Standard on watch

Standard & Poor's put Pioneer-Standard Electronics Inc. on CreditWatch with negative implications including its $150 million 8.5% senior notes due 2006 at BB- and Pioneer Standard Financial Trust's $125 million convertible trust preferred securities at B-.

S&P said the watch placement is in response to Pioneer-Standard's announcement that it will sell the net assets of its Industrial Electronics Division to Arrow Electronics Inc. for about $285 million in cash.

Although Pioneer-Standard is exiting its less profitable and more volatile segment, the remaining business - the Computer Systems Division - could not currently support a higher rating level, S&P said. The CreditWatch listing reflects uncertainty as to: the final capital structure of the company; the use of proceeds (which could potentially include cash dividends, share repurchases, debt repayment and/or acquisitions); as well as the longer-term business profile of Pioneer-Standard.

As of Sept. 30, 2002, cash balances were $69 million, and debt plus trust preferred securities totaled $294 million. Gross proceeds from the pending sales will be about $285 million.

Moody's puts Pioneer-Standard on review

Moody's Investors Service put Pioneer-Standard Electronics Inc. on review for possible downgrade including its $150 million senior unsecured notes due August 2006 at Baa3 and $144 million convertible trust preferreds due March 2028 at Ba1.

Moody's said the review is in response to Pioneer-Standard's announcement that it has reached agreement to sell most of its component distribution assets and certain small equity investments in an overseas joint venture to Arrow Electronics in a cash transaction valued at $285 million.

Moody's said the review is prompted by the proposed asset sale and concern regarding Pioneer's smaller size and reduced customer and supplier diversification. Partially offsetting this concern is the lower volatility associated with the computer systems business relative to the component distribution operations and the reduced balance sheet risk due to the pending cash proceeds.

S&P rates new Comcast notes BBB

Standard & Poor's assigned a BBB rating to Comcast Corp.'s $600 million of 5.85% senior unsecured notes due 2010 and $900 million fo 6.5% senior unsecured notes due 2015.

Proceeds will be used to repay some of the $4 billion bridge loan used to finance a portion of the AT&T Broadband deal.

S&P affirmed the BBB corporate credit rating on Comcast, which has roughly $30 billion of debt outstanding, excluding debt exchangeable into other stocks.

The outlook is negative, reflecting operating challenges Comcast could face in improving and integrating the AT&T Broadband properties.

Demonstrated progress in these efforts and anticipated debt reduction from monetizations could be the basis for an outlook revision to stable in the next few quarters.

Fitch cuts AES Gener

Fitch Ratings downgraded AES Gener SA's senior unsecured foreign currency rating to BB- from BBB- and put it on Rating Watch Negative.

Fitch said the action is because of near-term liquidity constraints and longer term refinancing concerns.

Gener continues to work through its liquidity issues, Fitch noted. The company successfully refinanced two bank loans in the third quarter of 2002, which resulted in an amortization schedule that closely tracks projected free cash flow available for debt service and limits financial flexibility.

The recent refinancings plus semiannual interest payments on the $503 million convertible bond and $200 million Yankee bond have resulted in total required debt service payments in 2003 of approximately $159 million, assuming the near-term sale of certain assets and application of a portion of those proceeds.

The sale of that investment should improve liquidity and provide additional financial alternatives, Fitch said. Given ongoing negotiations and continued interest by both parties, Fitch believes that an agreement to sell such asset is likely in the near term and should provide sufficient liquidity to stabilize the credit while it focuses on its longer-term refinancing efforts. However, the Rating Watch status will remain until the transaction is closed.

S&P says Radio One unchanged

Standard & Poor's said Radio One Inc.'s ratings are unchanged including its corporate credit at B+ with a positive outlook on the company's agreement to make a direct cash investment of up to $70 million over four years to help launch a new cable network.

Expected to be launched in mid-2003, the network will target the 25-54 year-old African-American audience. The network will likely generate losses for the next few years, S&P noted.

Radio One maintains adequate liquidity at the rating level, derived from cash balances of about $65.9 million at Sept. 30, 2002, and $189 million in borrowing availability under its revolving credit agreement, S&P said.

The positive outlook incorporates the expectation that strengthening ad demand and station revenue share gains could contribute to longer-term financial improvement while the company continues to pursue growth opportunities if the pace of acquisitions moderates from recent year's levels, S&P said. However, debt-financed acquisitions, consistent with the company's historical pace, could limit potential upside over the near to intermediate term.

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