Moody's puts Stagecoach on upgrade review

Moody's Investors Service put Stagecoach Group plc on review for possible upgrade including its $500 million 8.625% senior unsecured notes due 2009 and €400 million 6% senior unsecured notes due 2004 at Ba1.

Moody's said the review was prompted by a material improvement in Stagecoach's overall credit metrics following the disposal of selected assets, including the sale of a substantial portion of Coach USA.

In addition the group's residual operating performance has demonstrated robustness and any uncertainties associated with renewal of the SWT franchise have now been removed following signing of the new three-year franchise agreement.

Stagecoach's improved performance together with the disposal proceeds has also significantly strengthened liquidity enabling the company to restore its financial flexibility as well as position itself appropriately for future refinancing, Moody's added.

Moody's lowers Vitro outlook, rates notes B2

Moody's Investors Service lowered its outlook on Vitro SA de CV, confirmed its existing ratings including its senior implied at B1 and assigned a B2 rating to its proposed $250 million senior notes due 2013.

The ratings recognize Vitro's ability to weather its adverse operating environment which is primarily caused by spikes in natural gas and utility costs that exceeded expectations, increased competition from large off-shore multinationals and prolonged economic malaise throughout its geographies, Moody's said.

The ratings continue to reflect weak free cash flow relative to its sizable debt, high financial leverage and thin coverage of interest expense after capital expenditures. Given the pressures on volume and profitability, the ratings are particularly sensitive to any further erosion in interest coverage, increased financial leverage, and/or further deterioration of liquidity (specifically headroom under financial covenants in bank facilities - none of which are rated by Moody's).

The outlook change primarily reflects the absence of cushion under credit statistics to withstand further tightening and remain at current rating levels.

Pro-forma for the proposed bond issuance and debt refinancing, consolidated leverage (with total debt adjusted to include outstanding account receivables securitizations) will remain high at over 4 times for the 12 months to June 2003, Moody's said. EBITDA less capital expenditures covers interest expense just over one time. Free cash flow after dividends is expected to remain around 2% of total adjusted debt.

Moody's upgrades PGN

Moody's Investors Service upgraded PT Perusahaan Gas Negara (PGN), affecting $150 million of debt. The upgrade includes PGN's foreign currency senior unsecured rating, raised to B2 from B3 and its local currency senior implied rating, raised to Ba3 from B1. The outlook is stable.

Moody's said the action follows its decision to upgrade the government of Indonesia's domestic currency issuer rating to B2 from B3 and Indonesia's foreign currency country ceiling to B2 from B3.

The Ba3 senior implied local currency rating reflects PGN's solid operating and financial profiles on a standalone basis. Moody's notes that 100% of PGN's current debt outstanding is soft loans borrowed by the government of Indonesia from international credit agencies for on-lending to PGN, but these loans are not subject to cross default on government of Indonesia's other debt obligations, therefore allowing PGN to be rated higher than the government of Indonesia on a local currency basis.

Moody's upgrades Telkomsel

Moody's Investors Service upgraded the foreign currency senior unsecured rating of Telekomunikasi Selular Finance Ltd., guaranteed by PT Telekomunikasi Selular (Telkomsel), to B2 from B3. The outlook is stable.

Moody's said the action is as a result of its decision to upgrade Indonesia's foreign currency country ceiling for bonds to B2 from B3.

The B1 local currency long term issuer rating of PT Telekomunikasi Selular continues to be on review for possible upgrade, Moody's added.

Moody's upgrades Sampoerna

Moody's Investors Service upgraded to B2 from B3 the foreign currency rating of the $66 million senior unsecured notes issued by Sampoerna International Finance Co. BV and guaranteed by PT Hanjaya Mandala Sampoerna. The outlook is stable.

Moody's said the action is as a result of its decision to upgrade Indonesia's foreign currency country ceiling for bonds to B2 from B3.

The B2 rating reflects Sampoerna's well-established market position in premium brand clove cigarettes in Indonesia, Moody's said. The rating also reflects Sampoerna's satisfactory operating performance, good liquidity and reducing foreign exchange exposure. At the same time, the rating recognizes that Sampoerna's sources of revenue and profit are largely reliant on three major brands, and that its operating performance is subject to the impact from the changes in excise tax and minimum price regulations in Indonesia.

Moody's puts PT Telkom on review, direction uncertain

Moody's Investors Service put PT Telekomunikasi Indonesia Tbk (Telkom) on review, direction uncertain including its foreign currency issuer ratings at B3 and local currency issuer rating at B2.

Moody's said the action is as a result of its decision to upgrade Indonesia's foreign currency country ceiling for bonds to B2 from B3 and domestic currency issuer rating to B2 from B3.

Moody's said the review will focus on any issues that may emerge out of the current re-auditing of Telkom's 2002 accounts. The re-auditing is required by the SEC in the United States as part of its listing requirements for Telkom since its original auditor was not recognized under SEC regulations.

Assuming this re-auditing does not result in material changes to Telkom's 2002 accounts Moody's said it would expect to upgrade Telkom's ratings given Indonesia's sovereign upgrade.

Moody's upgrades Humpuss

Moody's Investors Service upgraded Humpuss Funding Corp's first preferred ship mortgage notes to B2 from B3. The outlook is stable.

Moody's said the action is as a result of its decision to upgrade Indonesia's foreign currency country ceiling for bonds to B2 from B3.

The notes are guaranteed by Humpuss Funding's affiliate, Cometco Shipping Inc. Cash flow to service the notes comes ultimately from the long-term charter agreement between Cometco and Pertamina. The charter agreement requires Pertamina to continue to make charter payments regardless of whether there are sufficient proceeds from the sale of LNG to CPC. Moody's believes that in view of Pertamina's 100% ownership by the government of Indonesia and the recent upgrade of Indonesia's foreign currency country ceiling, Pertamina's dollar payment obligations under the charter carry at least the same default risk as the long-term foreign currency payment obligations of the Indonesian government.

Moody's upgrades Indofood

Moody's Investors Service upgraded to B2 from B3 the foreign currency rating of the $280 million eurobonds issued by Indofood International Finance Ltd and guaranteed by PT Indofood Sukses Makmur Tbk (Indofood). The outlook is stable.

Moody's said the action is as a result of its decision to upgrade Indonesia's foreign currency country ceiling for bonds to B2 from B3.

Indofood's local currency issuer ratings remains B1 with a negative outlook.

Moody's upgrades Bank Mandiri, Bank Negara

Moody's Investors Service upgraded the senior debt of Bank Mandiri and Bank Negara Indonesia to B2 from B3. The outlook is stable.

Moody's said the action is as a result of its decision to upgrade Indonesia's foreign currency country ceiling for bonds to B2 from B3.

The subordinated debt of Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia remains at B3.

Moody's cuts National Power outlook

Moody's Investors Service lowered National Power Corp.'s outlook to negative from stable. Its debt is rated Ba1.

Moody's said the action follows its decision to change the outlook to negative for the Philippines' foreign currency sovereign ceiling and government bond ratings.

National Power's Ba1 rating reflects the Philippines government's unconditional and irrevocable guarantee for its rated senior unsecured debts.

Moody's lowers Equitable PCI Bank, Metropolitan Bank, Philippine National Bank outlook

Moody's Investors Service lowered to negative from stable its outlook on Equitable PCI Bank including its subordinated debt at Ba1, Metropolitan Bank and Trust Co. including its subordinated debt at Ba1 and Philippine National Bank including its senior debt at Ba1.

Moody's said the revision follows the change to negative in its outlook for the Philippine country ceilings including foreign currency long-term debt at Ba1.

S&P rates IT Holding B+

Standard & Poor's assigned a B+ long-term corporate credit rating to Italian fashion company IT Holding SpA. The outlook is stable.

S&P said the rating reflects IT Holding's leveraged financial profile and limited financial flexibility.

These factors are mitigated, however, by the good recognition of the company's diverse owned and licensed brand portfolio, as well as by IT Holding's flexible manufacturing capacity. In addition, the company has a sound track record of strict brand control and innovative design, as well as an efficient supply chain that has enabled it to successfully and rapidly respond to market trends, S&P said.

At June 30, 2003, IT Holding's on-balance-sheet gross debt (excluding about €100 million of net securitized receivables) totaled €347 million.

IT Holding is expected to maintain sufficient financial flexibility at all times, including prudent and early refinancing of debt maturities through 2005, S&P commented.

Moody's rates Standard Pacific notes Ba2

Moody's Investors Service assigned a Ba2 rating to Standard Pacific Corp.'s new $150 million senior notes and confirmed the company's existing ratings including its senior notes at Ba2 and senior subordinated notes at Ba3. The outlook is stable.

Moody's said the stable outlook reflects its expectation that the company will maintain capital structure discipline while pursuing its expansion opportunities.

The ratings consider the strength of Standard Pacific's major markets in California, satisfactory homebuilder debt leverage, steady improvement in gross margins coupled with a growing equity base and successful efforts to diversify geographically, Moody's said.

However, the ratings consider the risks of having a regional concentration in California, integration challenges from acquisitions, the stock buyback program and the cyclical nature of the homebuilding industry.

In part to fund its brisk expansion, homebuilding debt leverage has increased during the 12 months ended June 30, 2003, with pro forma debt/capitalization rising to 54.3%, vs. 47.9% at June 30, 2002, Moody's noted.

Fitch cuts TFM

Fitch Ratings downgraded the foreign and local currency senior unsecured debt ratings of TFM, SA de CV to B+ from BB-. The outlook is stable. The rating action applies to TFM's $150 million senior notes due 2007, $443 million senior notes due 2009 and $180 million senior notes due 2012.

Fitch said the action reflects the combination of the termination of the announced acquisition of TFM by Kansas City Southern and TFM's weaker than expected financial performance.

Originally, the transaction was viewed as a mild positive to the extent that it would ultimately have replaced controlling shareholder Grupo TMM, SA, which is currently under financial distress, with KCS, which is financially stronger albeit highly leveraged. TMM is currently in payment default as it did not pay its $177 million bullet maturity on May 15, 2003 after failing to complete a bond exchange offering.

In August 2003, TMM announced that its board of directors notified KCS of the termination of the acquisition transaction after its shareholders voted not to approve the sale of its controlling stake in TFM to KCS. KCS is proceeding with legal action against TMM as the controlling TMM shareholders had agreed to the acquisition and de facto voted for the transaction; the outcome of the litigation is uncertain.

The current conflict between TFM's shareholders holds the potential to distract and divert management time attention away from operating the railroad as well as negotiating the best possible outcome with the Mexican government regarding the pending value-added tax payment to TFM and the government's sale of its stake in TFM, Fitch said. The challenges facing TFM shareholders, such as TMM's default and the potential legal battle between TMM and KCS also could lower financial flexibility and liquidity at the operating company, due to the greater perceived risks associated with the disputing shareholder groups. Positively, TFM does not have significant financing needs until 2007.

TFM's financial performance has deteriorated over the past several quarters. TFM's gross interest coverage, as measured by EBITDA/interest, declined to about 2.0 times during the first six months 2003 compared to 3.0x during the first six months 2002, Fitch said. During the same period, debt/EBITDA weakened to 4.6x from 4.2x. The decline in credit protection measures is a result of weaker profitability caused by weak cargo demand from the Mexican automotive sector and higher fuel costs, and the depreciation of the Mexican peso against the U.S. dollar.

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