S&P affirms Apache

Standard & Poor's affirmed the ratings of Apache Corp. (senior unsecured at A- and preferreds at BBB) following the announcement that it is buying U.K. and U.S. oil and gas properties from British Petroleum plc for $1.3 billion plus $100 million in obligations.

While the acquisition will increase Apache's debt leverage, S&P noted debt leverage consistent with the rating and solid cash flow protection measures. Also, S&P expects Apache will limit capital spending to less than anticipated 2003 operating cash flow, allowing for debt leverage reduction.

The outlook is stable, assuming Apache will strengthen its capital structure before pursuing additional large debt-financed acquisitions. Apache is expected to apply the proceeds of asset sales to debt reduction.

Liquidity is very strong, S&P said, noting Apache should increase its committed, available bank credit to more than $1 billion upon the completion of anticipated capital markets transactions.

Fitch affirms Apache

Fitch Ratings affirmed the debt ratings of Apache Corp., (long-term at A- and preferreds at BBB) following the company's announcement that it has agreed to acquire producing properties from British Petroleum for $1.3 billion.

The outlook remains stable.

Moody's cuts Alliant to Baa3

Moody's Investors Service downgraded the senior unsecured rating of Alliant Energy Resources Inc. to Baa3 from Baa1.

Moody's also lowered the ratings for utility subsidiaries Wisconsin Power & Light Co. and Interstate Power & Light Co.

The downgrade reflects substantial leverage, lower than anticipated earnings and cash flow from non-regulated investments, plus the reliance on asset sales and equity offerings to improve the balance sheet, Moody's said.

Also the downgrade reflects potential of increased pressure on regulated utilities to support the cash needs of Alliant and sizable capital expenditures program at the regulated utilities.

The rating outlook is stable, reflection an expectation that the asset sale program will be substantially executed and the financial structure will improve near term.

Fitch rates EOP notes

Fitch Ratings has assigned a BBB+ rating to the recent offering of $500 million of 5.875% senior notes due 2013 by EOP Operating, LP, the principal operating partnership of Equity Office Properties Trust.

Fitch also affirmed the ratings at BBB+ for $9.0 billion of outstanding senior unsecured notes due 2003 through 2031 and BBB for $876 million outstanding preferred stock of Equity Office Properties Trust.

The outlook is stable.

S&P cuts Kerr-McGee outlook

Standard & Poor's affirmed the BBB long-term corporate credit and senior unsecured ratings of Kerr-McGee Corp. Inc. but the outlook was revised to stable from positive.

The outlook revision reflects S&P's expectations that Kerr-McGee's deleveraging to a credit profile commensurate with a higher rating is not likely to be achieved in the near term. A

Although the company achieved meaningful debt reduction in 2002 through asset sales, the recent $335 million writedown of its Leadon field in the U.K. North Sea highlights the challenges Kerr-McGee faces in deleveraging through organic growth, S&P said.

Largely as a result of its reserve writedowns, Kerr McGee's leverage has spiked to the upper-50% area despite debt reduction of about $700 million in 2002.

The liquidity position is adequate, supported by availability under $1.45 billion in credit facilities, and cash and cash generating ability are satisfactory.

Kerr-McGee has manageable debt maturities over the intermediate term, with $100 million due in 2003, $350 million in 2004, and $500 million in 2005, S&P said.

Fitch cuts Tyco outlook

Fitch Ratings rated the $4.5 billion of new convertible senior debentures of Tyco International Group SA at BB and affirmed the BB senior unsecured debt of Tyco International Ltd. but cut the outlook to negative.

The move to a negative outlook, Fitch said, reflects positive actions that remove the immediate risk of further deterioration in liquidity and other concerns.

Despite significant progress addressing short-term maturities, however, Fitch said Tyco could potentially be left with nominally sufficient cash balances by calendar yearend.

In addition, concerns have yet to be fully addressed about Tyco's overall capital structure, allocation of free cash flow, operating performance and ability to meet internal cash generation forecasts, long term strategy and full access to capital markets, Fitch said.

Weak market conditions, particularly in the electronics segment, and turmoil surrounding Tyco have caused lower margins and free cash flow.

Combined with a heavy debt burden, declining operating performance makes debt reduction from operating cash flow a requirement for any improvement in the rating.

EBITDA/interest incurred fell to 5.5x in 2002, compared to 9.0x in 2001, and debt/EBITDA has deteriorated as well, Fitch noted.

Higher leverage restricts its flexibility and reinforces the importance of effective and reasonably prompt action by the new management team to rebuild financial performance.

S&P says Georgia-Pacific unchanged

Standard & Poor's said Georgia-Pacific Corp.'s ratings are unchanged including its corporate credit rating at BB+ with a negative outlook following the company's announcement of a $315 million addition to its reserve for asbestos liabilities and defense costs (pretax and net of anticipated insurance recoveries) through 2012.

The company established a $350 million reserve last year covering periods through 2011, S&P noted. However, it experienced significantly greater than expected outlays during 2002, mostly as a result of higher settlement amounts for cases involving serious illness.

Georgia-Pacific spent (pretax and before insurance) about $44 million per quarter during the first nine months of 2002, twice as much as during the same period in 2001. The liability still seems manageable with insurance expected to cover a portion of Georgia-Pacific's costs for a number of years.

However, if asbestos-related payments continue to escalate, or if asbestos liabilities hamper Georgia-Pacific's access to capital for debt refinancing, ratings could be lowered, S&P said.

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