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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (63113)	4/23/2002 11:13:55 PM
From: StanX Long	Read Replies (1) \| Respond to of 70976

WorldCom Debt Nears Distressed Level on Ratings Cut (Update1) By Heather Landy New York, April 23 (Bloomberg) -- WorldCom Inc. bonds neared distressed levels and its stock fell to the lowest in a decade after lower earnings estimates caused the long-distance carrier's credit rating to be cut two levels by Moody's Investors Service. The downgrade to ``Baa2'' from ``A3'' follows yesterday's reduction by Standard & Poor's and leaves the sixth-biggest U.S. corporate bond issuer two levels from junk, or speculative grade. WorldCom's bond yields rose to junk levels last month when the U.S. Securities and Exchange Commission started probing accounting methods and loans to Chief Executive Officer Bernard Ebbers and other managers. WorldCom slashed 2002 sales forecasts last week because of lower demand from business customers. ``Investors are telling you that the potential for default is rising,'' said Eric Rasmussen, who's been selling WorldCom bonds from the $5.5 billion portfolio he manages at Victory Capital Management. ``They need to get this SEC investigation resolved and need a recovery in the telecom business.'' WorldCom shares fell for a fourth day, dropping 60 cents to $3.41, after falling to as low as $3.22. The stock has declined 76 percent this year. The company's 8.25 percent coupon bonds maturing in 2031 plunged to 58.75 cents on the dollar from 64 cents, traders said. That pushed up the yield to 14.2 percent from 13.1 percent for a spread to comparable Treasuries of 906 basis points. Bonds trading at spreads of 1,000 basis points over Treasuries are considered distressed, according to Merrill Lynch & Co. A basis point is 0.01 of a percentage point.