S&P rates Chubb A+

Standard & Poor's assigned an A+ rating to Chubb Corp.'s proposed $525 million senior note due November 2007, which will be part of its mandatory convertible offering.

S&P expects total growth in net premium written to be about 30% in 2002 and a consolidated combined ratio of less than 100% for 2002, excluding catastrophic events.

Financial leverage is expected to remain satisfactory for the current ratings level, S&P said.

Fitch rates Hilton

Fitch Ratings assigned a BB+ rating both to Hilton Hotels Corp.'s $375 million 10-year senior unsecured notes due December 2012 as well as Hilton's proposed $150 million 364 day revolving credit facility.

Fitch confirmed the other Hilton ratings, including the convertible notes at BB-.

However, ratings remain on negative outlook due to the continuing negative trend in industry revenues.

Despite a severe environment, Hilton has managed to maintain relatively steady credit statistics since yearend 2001 and has actually reduced debt during 2002, Fitch said.

Increases in debt/EBITDA following have been entirely due to EBITDA deterioration.

Trailing 12-month interest coverage has recovered to 2.5x, equal with the level at year end 2001 and 2000, due to a strong drop-off in interest expense resulting from high levels of floating rated debt and lower interest rates, Fitch said.

Fitch rates Kohl's

Fitch Ratings assigned ratings to Kohl's Corp., including A- for the 0% convertible notes. The outlook is stable.

Ratings reflect strong operating performance in a difficult retail environment and a solid financial profile. Ratings also consider an aggressive pace of expansion and execution risks inherent in entering new markets.

Credit measures have strengthened, with EBITDAR/interest plus rents increasing to 5.5x in the 12 months ended Nov. 30 from 3.9x in 1997 and adjusted debt/EBITDAR was 2.2x versus 2.3x in 1997. Going forward, Kohl's should be able to finance growth internally and, thus, leverage should decline to a range of 1.5x-2.0x, Fitch said.

Liquidity is solid following a recent $300 million issue of 30-year notes, which provides a backstop in the event the $340 million of convertible are called or put back to the company in June 2003.

Kohl's has significant excess seasonal borrowing capacity, with a $225 million receivables purchase facility and a $665 million revolver, compared with peak seasonal needs of around $350 million, Fitch added.

Fitch rates D.R. Horton notes BB+

Fitch Ratings assigned a BB+ rating to D.R. Horton, Inc.'s new $215 million 7.5% senior notes due 2007. The outlook is stable.

The issue ranks pari passu with all other senior unsecured debt, including D.R. Horton's $805 million unsecured bank credit facility. Proceeds will be used to repay indebtedness outstanding under its revolving credit facility.

The new issue has more favorable rates and attractive maturity relative to the debt it would replace, Fitch said.

Fitch added that it remains comfortable with D.R. Horton's stated debt to capital target of 49% or less by the end of 2003.

Ratings for D. R. Horton are based on the company's above-average growth during the recent economic expansion, execution of its business model, steady capital structure and geographic and product line diversity, Fitch said.

The company has been an active consolidator in the homebuilding industry which has kept debt levels a bit higher than its peers, Fitch noted. But management has also exhibited an ability to quickly and successfully integrate its many acquisitions. During fiscal 2002 the company completed its largest acquisition in absolute size (Schuler Homes) and is unlikely to make additional acquisitions over the coming 12 months.

Risk factors include the inherent (although somewhat tempered) cyclicality of the homebuilding industry, Fitch said. The ratings also manifest the company's aggressive, yet controlled growth strategy, moderate bias towards owned as opposed to optioned land and its relatively heavy speculative building activity (which has lessened of late).

Moody's cuts Reliant Resources

Moody's Investors Service downgraded Reliant Resources, Inc. and kept it on review for further downgrade. Ratings lowered include Reliant Resources' bank loan to B3 from Ba3 and Reliant Energy Mid-Atlantic's senior secured debt to Ba3 from Baa3. Moody's confirmed Orion Power Holdings' senior unsecured debt at Ba3 and left it on review for downgrade.

Moody's said it lowered Reliant Resources because it considers the company's financial flexibility is limited in the face $5 billion of bank debt maturing in 2003 including a $2.9 billion bridge loan maturing in February, $420 million of Reliant Energy Power Generation Benelux debt maturing in July, $600 million of Reliant Energy Capital Europe debt maturing in March and $800 million of the $1.6 billion corporate revolver maturing in August.

The company plans to launch a global refinancing of these facilities in the near term, Moody's noted.

The near-term outlook for Reliant Resources' wholesale business remains poor, driven by depressed wholesale prices both in the U.S. and in Europe, constrained capacity markets, and poor credit conditions in the energy trading sector, all of which will pressure margins and challenge the company's ability to generate stable cash flow from operations, Moody's said.

In the near term, Reliant Resources' retail business buffers poor performance in the wholesale business, but the company's free cash flow is limited in relation to its high debt burden, Moody's added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.