S&P cuts Goodyear to junk

Standard & Poor's downgraded Goodyear Tire & Rubber Co. to junk. Ratings affected include Goodyear's $250 million 6.625% notes due 2006, $150 million 7% notes due 2028, $100 million 6.375% senior notes due 2008, $300 million 8.125% notes due 2003, $300 million 8.5% notes due 2007, €400 million 6.375% bonds due 2005, $800 million term loan due 2004 and $650 million 7.857% notes due 2011, all cut to BB+ from BBB, and its SFR158 million 5.375% bonds due 2006, left at BBB-. The outlook is stable.

S&P said the downgrade reflects Goodyear's "recent poor operating performance and Standard & Poor's concerns regarding the company's long-term profit potential, given challenging industry fundamentals and the constraints posed by the company's current manufacturing footprint, which makes it very difficult for Goodyear to respond quickly to industry pressures and changes."

The rating agency added that actions taken by the company to improve working capital management and reduce costs will lead to better credit protection measures "over time," the improvement is now expected to be less than previously anticipated.

Moody's downgrades Saks

Moody's Investors Service downgraded Saks Inc., affecting $3.2 billion of debt including Saks' senior unsecured debt, lowered to B1 from Ba2, its senior unsecured guaranteed bank agreement, lowered to B1 from Ba2. The outlook is stable.

Moody's said it lowered Saks' ratings because of "the impact on debt protection measures of the company's sluggish comparable store sales over the past two years, the success of other retail formats in growing at the expense of traditional department stores, and the weaker recent performance at Saks Fifth Avenue Enterprises, exacerbated by the attacks on the United States on September 11th."

Moody's said it anticipates Saks' operating performance will stabilize or improve over the intermediate term and believes existing bank facilities are sufficient to fund working capital needs.

Moody's rates US Oncology notes B2

Moody's Investors Service assigned a B2 rating to U.S. Oncology, Inc.'s planned offering of $175 million senior subordinated notes and a Ba2 rating to its proposed $100 million senior credit facility. The outlook is stable.

Although U.S. Oncology has modest leverage and adequate coverage levels, Moody's said the ratings reflect the company's "declining operating trends, the potential complications that may arise from the company's recently announced reorganization of its business model and the limited visibility into future performance caused by this change."

Moody's said U.S. could be adversely affected by any change in reimbursement methodology for oncology drugs by the government and third party payors and has a concentration of revenues at one affiliated practice.

However the company has a leading national market position, could benefit from a successful transition away from the PPM business model through reduced capital outlays and favorable demographic trends and has an experienced management team, Moody's said.

Moody's downgrades Marconi

Moody's Investors Service downgraded Marconi Plc's senior debt to B2 from Ba3 affecting £2 billion of securities. The outlook remains negative.

Moody's said it cut Marconi's ratings because of a fast decline of sales and orders in the company's core business. This has exceeded the positive impact of management's accelerated cost saving and cash release plan. In addition, the company's rated debt has an increasing level of structural subordination, Moody's said.

Moody's said the outlook is negative because of low demand visibility for the company and the continuing pressure to align the cost base to shrinking revenues.

The rating agency noted management is on track with asset sales and debt reduction.

But "the sharp order decline in Marconi's core business of telecom equipment compared to the previous year has accelerated," Moody's added. "If the order slide were to continue at the current rate outpacing cost saving measures, then future business volumes and margins would likely not be sufficient to generate operating cash flows that would cover all interest expenses, which would then have to be funded from further asset disposals."

S&P cuts Centennial Communications outlook to negative

Standard & Poor's lowered its outlook on Centennial Communications Corp. and its subsidiaries to negative from stable. Ratings affected include Centennial's B- subordinated debt ratings and Centennial Cellular Operating Co. LLC's senior secured bank loan at B+.

S&P said it lowered the outlook because of "the continuing deterioration of the company's domestic operating cash flow and slower-than-expected growth in its Caribbean operations." Along with increased debt, these factors have led to a deterioration in credit measures.

The rating agency added that its assessment of Centennial reflects the high financial risk resulting from its high debt burden, increasing competitive pressures in its U.S. cellular operations, and the integration and execution risks of its acquisitions in the Caribbean in the past two years.

However Centennial has strong cash flow from its domestic operations and its Caribbean operations in Puerto Rico, Dominican Republic, Jamaica, and U.S. Virgin Islands have good business positions.

S&P cuts Millenium Seacarriers to D

Standard & Poor's downgraded Millenium SeaCarriers to D after it filed for bankruptcy under Chapter 11. The company's $100 million of first priority ship mortgage notes due 2005 were previously rated CCC+.

S&P says proposed reorganized Pacific Gas & Electric would be BBB

Standard & Poor's said Pacific Gas & Electric Co. proposed reorganization to emerge from bankruptcy would likely result in four companies with investment-grade ratings in the BBB category.

Pacific Gas & Electric is currently rated D.

S&P said the plan is subject to bankruptcy court confirmation and several key regulatory approvals.

Under the plan, Pacific Gas & Electric's operating activities - generation and transmission of electricity and transmission of natural gas - would be split into three limited liability companies, all subsidiaries of a single holding company, and an unrelated retail electric and gas distribution company subject to regulation will succeed PG&E.

Together the four companies are expected to issue about $9.5 billion of debt, S&P said. Cash on hand and the new debt will be used to extinguish existing obligations.

"The sound cash flows that PG&E is forecasting for the successor companies reflect a transfer of significant regulatory oversight to the FERC from the CPUC (California Public Utilities Commission)," S&P said. "In particular, the plan is founded upon the assumption that the newly created generation company will sell its output to the gas and electric distribution company at FERC-approved prices that are reflective of long-term fixed-price wholesale electric power contracts, rather than production costs, as sought by the state."

Moody's rates new Aftermarket Technology bank line Ba2

Moody's Investors Service assigned a Ba2 rating to Aftermarket Technology Corp.'s new $220 million guaranteed senior secured credit facility and upgraded its senior implied rating to Ba2 from Ba3.

Moody's also confirmed ratings on its outstanding debt which will be repaid with proceeds from the new credit facility and a concurrent equity offering. Ratings affected include Aftermarket's $100 million guaranteed senior secured revolving credit facility due 2003 and its $130 million guaranteed senior secured term loan due 2003, both at Ba3, and its $120 million ($87.8 million outstanding) 12% series B senior subordinated notes due 2004 and its $40 million ($22.6 million outstanding) 12% series D senior subordinated notes due 2004, both at B2.

The outlook is stable.

Moody's said the upgrade and stable outlook reflect that Aftermarket's leverage will be significantly reduced and its liquidity position will be improved upon the closing of the recapitalization.

The rating agency also noted Aftermarket's operating results have shown steady improvement.

Moody's downgrades Touch America, still on review

Moody's Investors Service downgraded Touch America, Inc., affecting $254 million of debt, including its senior secured rating, lowered to B3 from Ba3. The ratings remain on review for possible further downgrade.

Moody's said it lowered the ratings because of concerns about "the fundamental financial performance of the company as well as continuing uncertainty regarding the outcome of the Montana Public Service Commission's approval of the sale of Montana Power Company's (MTP) electric power transmission and distribution business to Northwestern Corp."

An unfavorable ruling from the commission will likely result in another downgrade, Moody's said.

A favorable ruling will permit the sale to go through, raising $602 million in cash which will give short-term relief to Touch America's "highly constrained liquidity position," Moody's said.

S&P rates new PS Business Parks preferreds BB+

Standard & Poor's assigned a BB+ rating to PS Business Parks Inc. offering of $50 million of 8.75% preferred.

S&P rates new First Republic preferreds BB

Standard & Poor's assigned a BB rating to First Republic Preferred Capital Corp.'s $40 million offering of Noncumulative preferred stock series B.

S&P downgrades AAi.FosterGrant

Standard & Poor's downgraded AAi.FosterGrant Inc. after the company missed an interest payment.

Afftected ratings include AAi.FosterGrant's $75 million of 10.75% senior notes due 2006, cut to D from CCC+.

S&P downgrades American Buildings

Standard & Poor's downgraded American Buildings Co. The outlook is stable.

Ratings affected include American Buildings' $55 million revolving credit facility due 2004, its $81.3 million term loan A due 2004 and its $186.1 million term loan B due 2005, all lowered to B+ from BB-. Also downgrades is Vicwest Corp.'s C$84 million 12.5% notes due 2007, cut to B- from B.

S&P keeps United Air Lines on negative watch

Standard & Poor's said UAL Corp. and its United Air Lines Inc. unit remain on CreditWatch with negative implications. The companies are rated BB-.

The rating agency noted United is negotiating with its mechanics' union in an attempt to reach agreement before a presidential emergency board issues recommendations on Feb. 19.

"The negotiations highlight the conflict between the union's desire to match pay gains achieved by other United unions and by mechanics at other large U.S. airlines, and the company's ongoing efforts to secure pay and productivity concessions from labor in order to trim United's high operating cost structure," S&P said.

Fitch cuts European Power to D

Fitch downgraded European Power Ltd. Co.'s $95 million of trust notes to D from CC.

The rating agency said European Power was effectively a risk transfer vehicle for Enron Corp. Its only source of funds for debt service and equity distributions were payments from Enron, now rated D.

European Power has no security over or recourse to the cash flows of the individual projects in Italy, Poland and Turkey whose performance indirectly affected payment on the notes.

As a result, Fitch said it cut the rating to reflect the bankruptcy of the economic obligor, Enron, and the absence of off-setting collateral.

Moody's upgrades Tatneft

Moody's Investors Service upgraded Tatneft Finance plc's $300 million global notes to B3 from Ca. The outlook is stable.

Moody's said the upgrade is in response to "the strong financial recovery that Tatneft has achieved since its default in October 1998, the company's significantly improved debt protection measurements and positive developments in its business mix."

Debt service on the notes is now up to date, Moody's said, although it added that Tatneft has "a mature and relatively low-quality reserve base with little potential for production growth, and remains vulnerable to falling oil prices and the influence by the Tatarstan Government."

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