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Enron Mail |
USA: UPDATE 1-Fitch cuts ratings on Enron debt.
Reuters English News Service- 11/05/01 Fitch Downgrades Enron To `BBB-'; Maintains Rtg Watch Negative Business Wire- 11/05/01 Enron Sr. Unsecured Debt Cut To Triple-B-Minus By Fitch Capital Markets Report- 11/05/01 USA: U.S. stocks seen higher at open on rate cut optimism. Reuters English News Service- 11/05/01 UK: British power trading slow, prompt lifted early. Reuters English News Service- 11/05/01 USA: UPDATE 1-Fitch cuts ratings on Enron debt. 11/05/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 5 (Reuters) - Fitch on Monday cut its ratings on the debt of embattled energy trader Enron Corp. and warned that it may cut the ratings again if the company does not reduce its debts, if its trading business deteriorates or if charges exceed present estimates. "Today's rating action reflects the difficulties Enron faces in managing its liquidity position in the face of an erosion in investor confidence," Fitch said. Fitch cut Houston-based Enron's senior unsecured debt to "BBB-minus," one notch above junk, from "BBB-plus," its subordinated debt to "BB" from "BBB," and its commercial paper to "F3" from "F2." The rating agency also downgraded Enron's preferred stock to "B-plus" from "BBB-minus." Fitch said reducing debt and exiting problem businesses are a management priority, and if Enron is successful, the company's credit profile will improve. "However, the targeted transactions have varying degrees of execution risk, particularly the divestiture of assets in emerging-market countries," Fitch said. Fitch's cut follows downgrades last week by Moody's Investors Service and Standard & Poor's. Enron's shares have lost more than 65 percent in less than a month amid concerns about financial practices that triggered an investigation by the U.S. Securities and Exchange Commission. S&P last Thursday cut Enron's corporate credit and senior unsecured debt ratings to "BBB," two notches above junk status, from "BBB-plus." Moody's Investors Service last Monday cut Enron's senior unsecured debt to "Baa2," two notches above junk, from "Baa1." Downgrades could make it tougher for Enron to issue debt and run its day-to-day business if fellow marketers and traders demand more collateral. Enron lined up $1 billion of new credit last week but may still have to sell assets to head off a credit squeeze and restore investor confidence, according to investment bankers. In its third-quarter results report last month, Enron said it expected over a billion dollars of write-offs related to soured investments. It also announced an extra $1.2 billion write-down of shareholder equity related to investments that were not recorded on its balance sheet. Enron's 6.4 percent notes due in 2006, bid at about 80 cents on the dollar a week ago, were bid at 73 cents on the dollar on Monday, a strategist said. Enron shares were up 40 cents, or 3.55 percent, at $11.67 in midday trade on the New York Stock Exchange. The shares have been in free-fall for two weeks. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Fitch Downgrades Enron To `BBB-'; Maintains Rtg Watch Negative 11/05/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--Nov. 5, 2001--Fitch downgrades Enron's outstanding securities as follows: senior unsecured debt to `BBB-' from `BBB+'; subordinated debt to `BB` from `BBB'; and preferred stock to `B+' from `BBB-`. Enron's commercial paper has been downgraded to `F3' from `F2'. The senior unsecured debt ratings of its pipeline subsidiaries, Northern Natural Gas Co. and Transwestern Pipeline Co., are lowered to `BBB-' from `A-`. All the above securities remain on Rating Watch Negative status. Fitch would consider further downgrades if Enron were unable to make progress in reducing debt, if its wholesale marketing and trading business were to show signs of material deterioration, or if expenses and charges related to the disposition of non- core businesses and investments exceed present estimations. Today's rating action reflects the difficulties Enron faces in managing its liquidity position in the face of an erosion in investor confidence. This follows the recognition of a substantial diminution in value of its global merchant investments, which were partly financed with an aggressive use of off-balance sheet vehicles. Enron should be able to manage through this challenging environment, ultimately recognizing the values of the company's core businesses. In October, Enron fully drew down the bulk of its committed bank facilities and paid down outstanding commercial paper, leaving it approximately $1 billion of cash on hand to support normal business activities. In addition, the company is in the process of executing a new $1 billion secured bank facility that pledges the assets of Northern Natural and Transwestern. Unsecured creditors are structurally subordinated to the secured lenders reducing asset coverage. While its current cash position appears adequate, securing additional capital sources through asset sales or raising additional capital would be a favorable development. A management priority is debt reduction and the exiting of problem businesses. Clearly, these actions, if completed as envisioned will reduce risk and improve the company's credit profile. However, the targeted transactions have varying degrees of execution risk, particularly the divestiture of assets in emerging market countries. An additional uncertainty is the Securities and Exchange Commission's (SEC) investigation of certain Enron sponsored partnerships. The outcome and potential impact of the SEC activity is difficult to predict. The largest announced transaction is the sale of Portland General Electric Co.(PGE) to Northwest Natural Gas Co. The sale appears to be moving ahead as planned and has the favorable support of key local interests. However, the transaction is not expected to close for another year. Enron's core businesses have continued to generate strong, predictable performance and have significant value. Prospectively, operations at Enron's domestic regulated pipelines would be less affected by any lingering uncertainty at Enron. Also, PGE is expected to generate positive and predictable earnings and cash flow over the next year. Combined, the pipelines and PGE generate nearly 25% of EBITDA. Wholesale and retail energy services segments have also consistently reported predictable and growing returns. Specifically, commodity marketing and trading activities, which comprise the most profitable and largest part of wholesale operations, have generated steady volume growth and stable unit margins. However, if Enron were unable to maintain the support of its counterparties or exhibited diminished financial flexibility, these businesses would be harmed. CONTACT: Fitch, New York Ralph Pellecchia, 212/908-0586 Robert Grossman, 212/908-0535 Hugh Welton, 212/908-0746 11:13 EST NOVEMBER 5, 2001 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Sr. Unsecured Debt Cut To Triple-B-Minus By Fitch 11/05/2001 Capital Markets Report (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Fitch downgraded Enron Corp.'s (ENE) senior unsecured debt ratings Monday to triple-B-minus from triple-B-plus, putting the Houston energy and trading giant's credit rating just one notch above noninvestment-grade or junk status. In its action, the rating agency was more aggressive than Moody's Investors Service and Standard & Poor's, both of which lowered Enron's long-term corporate credit ratings one notch last week to Baa2 and triple-B, respectively. Fitch said its rating action Monday reflects the difficulties Enron faces in managing its liquidity position in the face of an erosion in investor confidence. This follows the recognition of a substantial diminution in value of its global merchant investments, which were partly financed with an aggressive use of off-balance sheet vehicles, the rating agency said. Enron, though, should be able to manage through this challenging environment, ultimately recognizing the values of the company's core businesses, Fitch said. In other rating actions, Fitch lowered Enron's subordinated debt to double-B from triple-B, while Enron's preferred stock was lowered to single-B-plus from triple-B-minus. Fitch cut Enron's commercial paper to F3 from F2. Fitch also took action on the senior unsecured debt ratings of Enron's pipeline subsidiaries. The ratings of those units, Northern Natural Gas Co. and Transwestern Pipeline Co., were lowered to triple-B-minus from single-A-minus. The assets of Northern Natural and Transwestern were pledged last week to help Enron secure a new $1 billion secured bank facility. The rating agency said all of the ratings remain on "Rating Watch Negative" status. Fitch said it would consider further downgrades if Enron was unable to make progress in reducing debt, if its wholesale marketing and trading business were to show signs of material deterioration, or if expenses and charges related to the disposition of non-core businesses and investments exceed present estimations. A management priority is debt reduction and the exiting of problem businesses. Clearly, these actions, if completed as envisioned will reduce risk and improve the company's credit profile, Fitch said. However, the targeted transactions have varying degrees of execution risk, particularly the divestiture of assets in emerging market countries, the rating agency said. An additional uncertainty is the Securities and Exchange Commission's investigation of certain Enron-sponsored partnerships. The outcome and potential impact of the SEC activity is difficult to predict, Fitch said. -By Joe Niedzielski, Dow Jones Newswires, 201-938-2039; joe.niedzielski@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: U.S. stocks seen higher at open on rate cut optimism. By Chelsea Emery 11/05/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 5 (Reuters) - Stocks are seen climbing at the open of trading on Monday, as Wall Street looks for another half-point interest-rate cut on Tuesday to help put the lagging economy back on track and boost slumping corporate profits. Equities are getting an additional boost from the Treasury's decision last week to stop selling 30-year bonds, sending cash flowing out of bonds and into stocks, traders said. The gain in futures is "the half-point talking," said Brian Finnerty, co-head of capital markets at C.E. Unterberg Towbin. "The cut continues the aggressive moves on the part of the Fed, and it comes on top of a huge move by the Treasury. The Treasury did more in one fell swoop last week than the Fed's done all year. " Technology stocks rose in early trading, as investors geared up for Cisco Systems Inc.'s quarterly results after exchanges close. Analysts said the networking gear maker is likely to signal lagging sales are near a turnaround. December futures for the Standard & Poor's 500 index climbed 8 points, or 0.7 percent, to 1,097.50, while December futures for the Nasdaq composite index rose 21 points, or 1.5 percent, to 1,454.50. The Indicative Dow Jones index, which represents a basket of Dow stocks trading in Europe, slipped 2.4 points, or 0.02 percent. The U.S. Federal Reserve is widely expected to cut interest rates for a 10th time this year at its meeting on Tuesday, to help jump-start the lagging economy. Lower interest rates cut borrowing costs and can spur business development. Blue chips rallied on Friday, helping the broader market eke out gains, as investors shrugged off a report of the biggest U.S. job losses in more than two decades in October to bet on an economic recovery next year. "Any kind of bad news hasn't been able to hold the market down," said Bob Basel, a listed trader with Salomon Smith Barney. Cisco rose to $17.80 on electronic trading system Instinet, up from its close of $17.26. The company, which makes networking gear that helps power the Internet, is expected to report fiscal first-quarter results after exchanges close. Cisco is likely to signal sales are near a rebound, indicating the lagging tech industry has reached its low point and will begin to rebound soon, analysts and investors said. Microsoft Corp. rose to $61.74 from its Friday close of $61.40. Microsoft and the Justice Department reached a settlement agreement last week. Still, state antitrust enforcers have found what they say are serious flaws in the settlement, and the two sides may not be able to sign the deal in its current form, the Wall Street Journal reported in its online edition on Monday. The European Union said on Monday its probe of Microsoft continues despite the settlement. Enron Corp., the struggling energy giant, rose to $11.80 on Instinet, up from its close of $11.27 on Friday. Royal Dutch/Shell Group may mount an $11 billion bid for Enron, the UK's Independent paper reported on Sunday. Enron lined up $1 billion of new credit last week, but it still suffered a second credit rating cut amid concerns about questionable financial transactions that have triggered an investigation by the U.S. Securities and Exchange Commission. Pixar Animation Studios Inc. jumped to $37.25 from a Friday close of $36.70. Pixar and Walt Disney Co. scored a monstrous opening with their latest family cartoon "Monsters, Inc.," scaring up $63.5 million in ticket sales in its first three days, according to studio estimates issued on Sunday. Baxter International Inc. fell to $47.60 on Instinet from its close of $49 after it said preliminary tests show a processing fluid used in its manufacturing operations in Sweden may have played a role in kidney patient deaths linked to dialysis machines. Baxter said it plans to permanently discontinue making the product and warned it will take a fourth-quarter charge to cover costs related to the product cancellation. European markets gained on Monday, led by technology and auto stocks. Solid Wall Street futures and the prospect of more interest rate cuts later this week buoyed sentiment, traders said. Wall Street's resiliency on Friday, when investors looked beyond poor payrolls numbers and bet on a recovery next year, also helped steady European nerves. The FTSE Eurotop 300 index was up 1.5 percent and the Euro Stoxx 50 index rose 1.8 percent. Technology and auto stocks were the strongest as players funneled cash back into sectors which fell hard after the Sept. 11 attacks in the United States. Tokyo stocks inched higher in extremely thin trade on Monday after gains in Sony Corp and other select blue-chip stocks buoyed a market still wary of dwindling earnings and a bleak outlook for the U.S. economy. The benchmark Nikkei average climbed 0.61 percent or 63.76 points to 10,447.54, landing in positive turf for the second straight session. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. UK: British power trading slow, prompt lifted early. 11/05/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Nov 5 (Reuters) - British electricity trading was slow on Monday, with traders saying prompt prices were ending broadly unchanged after a higher start in part because of a band of colder weather affecting much of the country. "It's a fairly quiet market, still lacking liquidity," said one trader, referring to the reluctance of some companies to deal with Enron . In the U.S. the Securities and Exchange Commision is investigating substantial losses at Enron relating to a private equity operation run by the group's former chief financial officer. Traders said the prompt market opened strong with day-ahead baseload lifted at 20 pounds a megawatt hour. But the early strength evaporated during the day and in late trade the contract was down to about 17 pounds. December baseload gained early support from day-ahead. It was finishing the day at about 18.40 pounds from a low of 18.34 pounds. Q101 baseload was seen as high as 19.45 pounds before it fell to 19.30/19.35 pounds in the afternoon. Summer 02 baseload was a touch stronger at 17.25 pounds while winter 02 was assessed at 19.25 pounds. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.
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