Enron Debt Ratings Are Lowered by Fitch
Fitch cut its ratings on the debt of Enron Corp. and warned it may cut ratings again if the energy trader does not reduce its debts, if its trading business deteriorates or if charges exceed present estimates.
Fitch cut 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 its 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. Fitch’s cut follows downgrades last week by Moody’s Investors Service and Standard & Poor’s. Houston-based Enron lined up $1 billion of new credit last week but may have to sell assets to head off a credit squeeze and restore investor confidence, according to investment bankers.
Shares of Enron were down 13 cents to close at $11.17 apiece on the New York Stock Exchange.