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To: 2MAR$ who wrote (62739)	7/26/2002 4:59:43 PM
From: DebtBomb	Respond to of 208838

PALM, LOL, here comes the reverse splits, it's generally a kiss of death, no??

To: 2MAR$ who wrote (62739)	7/26/2002 5:01:44 PM
From: 2MAR$	Respond to of 208838

"Triple-A" companies: How the mighty have fallen By Jonathan Stempel NEW YORK, July 26 (Reuters) - Standard & Poor's decision on Thursday to strip Bristol-Myers Squibb Co.<BMY.N> of its "triple-A" rating highlights how the sputtering economy and more aggressive corporate strategies have made the most pristine of credit ratings increasingly rare. Just eight U.S. companies still enjoy "triple-A" ratings from S&P and Moody's Investors Service, two leading credit rating agencies. That's down dramatically from two decades ago, when Moody's rated 58 companies "triple-A" and S&P 25, including AT&T Corp.<T.N> and Kellogg Co.<K.N> The drop is emblematic of a broader corporate credit crisis that in the last year has stung investors in such companies as cable TV operator Adelphia Communications Corp.<ADELQ.PK>, energy trader Enron Corp.<ENRNQ.PK> and phone company WorldCom Inc.<WCOEQ.O> and soured many investors on corporate debt. "Investor sentiment is terrible," said Stephen Mahoney, who invests $4 billion for Glenmede Trust Co. in Philadelphia. "People are scared of buying corporate (bonds) regardless of rating. Being 'triple-A' rated doesn't have a significant impact in this market." COMPANIES WEAKEN BALANCE SHEETS S&P this week attributed the drop over time in "triple-A" companies to rising investor risk tolerance, and companies' sacrificing their balance sheets for shareholder returns. The eight companies still rated "triple-A" are all industry leaders, often with household names. They are: insurer American International Group Inc.<AIG.N>; Warren Buffett's Berkshire Hathaway Inc.<BRKa.N>; oil giant Exxon Mobil Corp.<XOM.N>; conglomerate General Electric Co.<GE.N>; drug giants Johnson & Johnson<JNJ.N>, Merck & Co.<MRK.N> and Pfizer Inc.<PFE.N>; and package deliverer United Parcel Service Inc.<UPS.N> Diane Vazza, S&P's head of global fixed-income research, said "prudence in maintaining credit quality is very important, but credit ratings should not be an arbitrary constraint on business. It is more appropriate for a company to operate for the good of the business and let the rating follow." A "triple-A" rating isn't meaningful when it is time to borrow. A typical "triple-A" bond yields 0.1 to 0.3 percentage point less than a "double-A" bond, Reuters data show. Some yield more. The five-year notes that "double-A" retail giant Wal-Mart Stores Inc.<WMT.N> sold this month now yield 4 percent, while GE's General Electric Capital Corp. finance arm's five-year notes yield 4.44 percent. Vazza said "there are fewer than 30 'double-A' companies, so you're still talking about an elite rating class. The definitional difference between 'double-A' and 'triple-A' is (also) very small -- 'double-A' means very strong ability to repay debt, while 'triple-A' means extremely strong." TOOTHPASTE, NOT TRIPLE-A, IN VOGUE Despite that, several "triple-A" companies have struggled this year. In July, Johnson & Johnson and Merck were forced to defend their accounting practices, and Merck had to scrap a public offering of its Medco Health Solutions Inc. pharmacy unit. Earlier this year, bond fund giant Bill Gross blasted GE Capital for selling too much short-term debt and Moody's said GE Capital lacked enough bank credit lines to back up the debt. GE Capital later added more credit lines and cut short-term debt. On Friday, GE said it will split GE Capital in four and announced the departure of the unit's chief executive. Bristol-Myers, for its part, lagged in developing new products and may have encouraged wholesalers to overstock its products, inflating the company's revenue, analysts have said. The average U.S. "triple-A" stock, including Bristol-Myers, has fallen 21.5 percent this year, not far below the 25.7 percent drop in the Standard & Poor's 500 index. Glenmede Trust's Mahoney, who owns GE, Merck and Pfizer bonds, said he is now seeking high-yielding high "single-A" and low "double-A" companies that may be upgraded. He likes Wal-Mart because "people who have lost huge amounts of money in the stock market may now want to save a buck." He also favors "double-A" rated Procter & Gamble Co. <PG.N>, reasoning that if the economy weakens or more corporate shenanigans emerge, "people are still going to have to buy toothpaste and soap." (( U.S. Financial Markets Desk, (646) 223-6317, jon.stempel@reuters.com )) REUTERS * end of story *