Well, this explains why WCOM sold off today.
I wish the S&P would chill a bit. At one time, a company would have to be at BK's door to get downgraded and now it seems all they have to do is overspend one month and S&P is out there with a downgrade at the beginning of the next month.
This wouldn't have anything to do with covering one's butt? Naah!
____________________________________________________________
S&P downgrades WorldCom bonds, may cut again
NEW YORK, June 17 (Reuters) - Standard & Poor's on Monday cut beleaguered WorldCom Inc.'s <WCOM.O> credit ratings two notches deeper into junk territory and said it may reduce them again because the company faces refinancing risks and weak demand for its long-distance services.
S&P lowered the long-term corporate credit rating of WorldCom, the No. 2 U.S. long distance phone and data provider, to "B-plus," its fourth-highest junk grade, from "BB." S&P said WorldCom had about $30 billion total debt outstanding at March 31.
An expected delay in obtaining a $5 billion bank loan was a factor in the WorldCom downgrade, S&P said. "Even if the bank loan is successfully negotiated, we are concerned about WorldCom's asset valuation in relation to its total debt outstanding, as the demand for long-distance voice and data services continues to be impacted by a slow economic recovery, technology substitution, and competition," S&P said.
Unless WorldCom presents a credible plan to meet upcoming debt maturities, ratings could be cut again, S&P said.
WorldCom's new chief executive said Friday he hoped to announce the details of a strategic turnaround plan in the next few weeks, along with new funding plans. John Sidgmore told an annual shareholders meeting WorldCom's situation was not as dire as media and analysts portray.
06/17/02 14:57 ET
Copyright 2002 Reuters Limited. |
