Moody's rates Cincinnati Bell's notes B2

Moody's Investors Service rated Cincinnati Bell Inc.'s proposed $300 million senior notes due 2013 at B2 and confirmed all existing ratings including the $644 million reducing senior secured revolver due 2006 at B1, the $516 million senior secured term loan A due 2006 at B1, the $308 million senior secured term loan B due 2006 at B1, the $138 million senior secured term loan C due 2007 at B1, the $50 million 7.25%senior secured notes due 2003 at B1, the $350 million 16% senior subordinated discount notes due 2009 at B3, the $400 million 9% convertible subordinated notes due 2009 at B3 and the $155 million 6.75%, series B perpetual convertible preferred stock at Caa1.

Broadwing Communications Inc.'s $46 million 9% senior subordinated debt rating due 2008 was confirmed at Caa3 and Cincinnati Bell Telephone Co.'s $150 million senior unsecured debentures were confirmed at Ba2.

The rating outlook is changed to positive from stable.

Moody's expects to withdraw all ratings of BCI upon the conclusion of the proposed exchange for Cincinnati Bell common stock.

The positive outlook reflects continued progress on the restructuring, the renewed focus on local and wireless businesses which should generate relatively stable performance, free cash flow which should allow the company to gradually pay down its debt, and the help in resolving the refinancing pressure that the new debt issue will provide, Moody's said.

Ratings reflect the company's highly leveraged profile and vulnerability to any heightening of local and wireless competition in its metropolitan market.

Rating also reflect the reputation of the Cincinnati Bell franchise, the company's incumbent strength and the dependability of its cash flows, its success in fending off local competition and its market- leading position in wireless, Moody's added.

Fitch rates Reliant Resources notes B+

Fitch rates Reliant Resources Inc.'s $550 million 9.25% senior secured notes due 2010 and $550 million 9.50% senior secured notes due 2013 at B+. The rating outlook is stable.

Net proceeds from the new issuance will be used to repay a portion of the company's $3.8 billion senior secured term loan. The expected pay down of bank debt eliminates a $500 million May 2006 mandatory principal payment required under the credit facility and, as a result, there will be no significant corporate level debt maturities until the final maturity of the bank credit facility on March 15, 2007. In addition, the bank debt pay down removes soft amortization targets in 2004 and 2005.

The notes rank pari passu with the $5.9 billion secured credit facility and will be secured by all previously unencumbered assets including a lien on approximately 9,200 megawatts of electric generating capacity and the pledge of certain subsidiary stock.

While the secured creditors have reasonable asset protection, the margin of protection is slimmer than in other comparable transactions due to the extremely high proportion of secured debt relative to total corporate debt and obligations, Fitch said.

The rating reflects the weak performance of the company's wholesale merchant power segment and the high debt leverage stemming from the 2002 acquisition of Orion Power Holdings.

Influencing the rating positively is the ongoing profitability and strong cash flow contributed by the company's Texas based retail electric operations, Fitch added.

RRI's current financial profile is overly leveraged, especially given cyclical commodity market conditions which have significantly reduced realized returns on the company's generating portfolio. Consolidated gross debt to EBITDA, adjusted to include off-balance sheet debt and certain non-recourse project financings, currently approximates 6.0 times (x). In addition, RRI's consolidated capital structure includes more than $2 billion of secured subsidiary debt and lease obligations with terms that could limit RRI's ability to upstream cash dividends for debt service at the corporate level.

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