RECENT CREDIT AGENCY RATING ACTIONS

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RECENT CREDIT AGENCY RATING ACTIONS
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1 DOWN, 3 UP! (WSJ, 6/5/2002)

• Moody's Investors Service cut its credit rating
  for Japan Airlines to junk-bond status because it
  expects price competition to heat up as JAL and
  Japan Air Systems combine their operations during
  the next two years. Moody's also said the weak
  Japanese economy makes any recovery in travel
  unlikely. The ratings agency lowered JAL's
  senior-debt rating one notch to Ba1 from Baa3.
  Debt rated below Baa3 is predominantly
  speculative, or junk.
• At the same time, Moody's raised the issuer
  rating of JAS to B1 from B2.

JAL
JAS
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Japans Debt Over the Top! (WSJ, 6/5/2002)

• Moody's Investors Service cut Japans
  credit rating by two notches,
  ranking Tokyo below
  all of its rich world peers
  in the Group of Seven industrialized
  economies, on a rung below
  developing economies as
  Botswana and Estonia and
  on par with Cyprus, Latvia and Poland.
• The move by Moody's highlights the severity of
  the national debt plaguing the world's
  second-biggest economy. It shows how even
  relatively wealthy nations like Japan can find
  their credit ratings in jeopardy from high debt
  levels.

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French Establishment Rushes to Vivendis Rescue!
Again! (WSJ, 6/5/2002)

• Under the new agreements, if Vivendi's credit
  rating drops to junk, it will have to immediately
  reimburse no more than 300 million, which it can
  easily cover with 3.5 billion in unused credit
  lines. SP immediately took Vivendi off its
  list of 23 companies with a
  "meaningful degree of liquidity risk"
  linked to triggers. But neither
  credit agency has changed its ratings.
• By the way, Vivendi has 35 billion of net debt
  for a market value of 36 billion

Vivendi
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Trading Floors Dangerous! WSJ, 5/31/2002

• Moodys says energy-trading companies may be too
  volatile for investment-grade ratings unless they
  can match up their trading floors with larger,
  more stable businesses that can generate the
  increasing cash flows energy trading now
  requires.

Analysts believe a fundamental restructuring of
the sector will be required to win back investor
confidence. The agency said options for the
industry include consolidation, the establishment
of a central clearing system that would reduce
some trading risks, or spin off their energy
trading floors into separately rated entities.
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Farmland Mired in Mud! (DowJones NewsWire,
6/4/2002)

• Standard Poor's lowered the company's long-term
  corporate credit rating to D from B- following
  Farmland's filing for bankruptcy protection under
  Chapter 11 May 31. SP cited that the company has
  about 1.9 billion in debt as of the end of
  February. Rating agency

Fitch also followed SP with a downgrade of the
company's rating to D.
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CRASH Creates Human and Financial Woes! (WSJ,
5/29/2002)

• A China Airlines crash on Saturday is taking a
  financial toll on the airline. The company cut
  its profit forecast by 12, reflecting expected
  increased insurance costs and passenger flight to
  competitors. Before the crash, the company was
  expected to exceed its previous forecast.
• Taiwan Ratings Corp. cut its rating by a notch.
  This will make it harder for China
  Airlines to borrow
  money. The airline's stock fell
  6.8 Monday in trading, and on Tuesday
  again declined by nearly the
  maximum 7 allowed by
  regulations.