S&P rates Rhodia notes BB-

Standard & Poor's assigned a BB- rating to Rhodia SA's proposed €700 million senior subordinated notes maturing in 2011 and confirmed its existing ratings including its corporate credit at BB+.

S&P said the proposed notes are rated two notches below the corporate credit rating because they will be subordinated to the senior debt.

Rhodia's ratings reflect the company's rather weak financial measures, as well S&P's expectation that these measures are unlikely to improve significantly in the short term given continued difficult market conditions.

The ratings on the group factor in its diversified business profile, underpinned by its leading positions as one of the largest specialty-chemicals concerns in the world, S&P added. Rhodia has nevertheless shown much lower resilience than expected.

S&P lowers Hartz Mountain outlook

Standard & Poor's lowered its outlook on Hartz Mountain Corp. to negative from stable and confirmed its ratings including its senior secured debt at BB-.

S&P said the outlook revision is because of Hartz Mountain's continued weaker than expected operating results and the limited cushion under its bank loan financial covenants.

The ratings continue to reflect Hartz Mountain's leveraged financial profile, weak credit measures, and customer concentration concerns, S&P added. These factors are partially mitigated by the company's well-known brand name, leading market shares, and broad product portfolio in the relatively stable pet care industry.

Hartz Mountain's financial condition is weak for the rating, S&P said. Following lackluster performance in 2002, operating performance continued to suffer from general economic weakness and adverse weather conditions in the first quarter of 2003.

Weak credit protection measures have fallen below S&P's expectations, which included EBITDA coverage of cash interest at 2.5x and total debt to EBITDA at less than 4x. EBITDA coverage of cash interest for the trailing 12 months ended March 31, 2003, dropped to about 2.3x from about 2.6x at year-end.

In addition, Hartz Mountain remains highly leveraged, despite approximately $15 million in voluntary prepayments of term debt in 2002 and an additional $5 million payment so far in 2003, S&P noted. Total debt (adjusted for operating leases) to EBITDA was about 4.5x for the same 12 month period. However, these credit measures are even weaker when taking into consideration the company's pay-in-kind seller note.

S&P said it is concerned that credit measures may continue to weaken in 2003 due to the weak economy and margin pressures arising from Hartz Mountain's continued sales shift to the mass merchandiser channel.

Fitch puts Vitro on watch

Fitch Ratings put Vitro, SA de CV on Rating Watch Negative including its senior unsecured foreign rating at BB.

Fitch said the action reflects the challenges that Vitro continues to face on its glass businesses, due to extended weak economic activity, pricing pressures from automobile manufacturers, import competition and lower cost absorption. These challenges have pressured cash flows and profitability, hampering Vitro's progress on debt reduction and the improvement of credit protection measures.

Vitro's debt remains high, at $1.576 billion at March 31, 2003, Fitch noted. Recent transactions in the local medium-term note and syndicated loan markets have extended the maturity profile and a portion of the proceeds have been used to increase Vitro's liquidity position.

At March 31, 2003 Vitro had $262 million in cash and marketable securities, the ratio of net debt to last 12 months EBITDA was 3.3x and the ratio of last 12 months EBITDA to interest expense was 3.0x.

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