Moody's: Cendant outlook stable

Moody's Investors Service said it changed Cendant Corp.'s outlook to stable from negative and affirmed the company's existing ratings. Ratings affirmed include Cendant Corp.'s senior unsecured notes and convertible bonds at Baa1.

The change in outlook reflects:

* The reduction in corporate debt to $5.3 billion in 2003 from $6.1 billion in 2002.

* Moody's expectation that corporate debt will be reduced from cash on hand, conversion of debt to equity or free cash flow to below $4.0 billion by year-end 2004 and that credit statistics will improve again in 2004.

* The improving travel demand outlook that should more than offset an eventual slowdown within the real estate services segment due to the anticipated rise in interest rates.

* The reduction in integration risk given the slower pace of large scale acquisitions and substantial completion of the Budget integration.

* Moody's expectation that Cendant will not pursue a large transformational acquisition in the near to intermediate term.

Moody's said Cendant's ratings reflect the company's relatively stable cash flow due to its mix of fee for service less capital intensive businesses (such as, lodging franchising, timeshare exchange, real estate franchising) that somewhat offset the greater earnings volatility of its more asset intensive businesses (car rental, timeshare and real estate brokerage).

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