Moody's rates Brake Bros notes B3

Moody's Investors Service assigned a prospective B3 rating to Brake Bros Finance plc's £175 million senior unsecured bonds due 2011. The outlook is stable.

Moody's said the ratings reflect Brake Bros' high debt leverage and related debt service costs; the company's currently limited pro forma free cash flow generation; the competitive marketplace in which the company operates; meaningful exposure to the tourism and leisure industries; on-going acquisition risk combined with meaningful unused debt capacity under the company's bond indentures (which is tempered somewhat by the relatively more restrictive covenants under the company's bank facility); and subordination issues with respect to the company's consolidated capital structure.

Positively, the ratings reflect Brake Bros' market leading position in the U.K. food distribution market and the company's growing presence in the more fragmented French market; the competitive advantages afforded by the company's extensive distribution network and strong brand leadership and marketshare positions; a broad customer and supplier base with limited concentration risk; sizable junior capital contributions from reputable shareholders (Clayton Dubilier & Rice) with strong experience in the food distribution industry; and the potential for meaningful cost reductions and revenue growth resulting from the integration of the company's previous acquisitions, Moody's added.

Going forward, meaningful cost and revenue growth benefits should result from the company's restructuring initiatives which include the consolidation of existing depots and the integration of sales and other staff responsibilities across the company's different businesses. Moody's notes, however, that while the company's restructuring and revolving credit facility should provide adequate funding for restructuring costs, the agency remains cautious with regard to the timing and magnitude of the future benefits to be derived from these initiatives.

Pro forma for the proposed transaction (as of Dec. 31, 2002), the company exhibited net debt/EBITDA (excluding exceptional items which were $32.7 million in 2002) of 4.90x (4.35x pro forma for implemented cost savings - £6.7 million and completed acquisitions - £2.4 million) and (EBITDA - capex)/net cash interest expense of approximately 1.19x (1.46x pro forma for cost savings and acquisitions), Moody's said.

Fitch cuts Presidential Life

Fitch Ratings downgraded Presidential Life Corp. including cutting its $100 million 7.875% senior notes due 2009 to B from BB-. The outlook is negative.

Fitch said the downgrade follows its review of year-end 2002 financial results for Presidential Life and its insurance subsidiary, Presidential Life Insurance Co. Adjusted statutory surplus for Presidential Life Insurance decreased by approximately $73 million during the year to $252 million, due in large part to $102 million of realized and unrealized capital losses. These losses were offset somewhat by $20 million in statutory operating gains for the year and $22 million benefit from changes in accounting principles.

Additional factors in the downgrade are the related decline in Presidential Life Insurance's NAIC risk-based capital ratio, which dropped to 183% of the company action level at year-end 2002 from 268% at the end of the previous year, as well as an increased exposure to below-investment grade bonds relative to adjusted surplus. Junk bonds equated to approximately 129% of adjusted surplus at the end of 2002, compared to approximately 76% at the end of 2001, Fitch noted.

Further, Presidential Life reported material gross unrealized investment losses in its bond portfolio of approximately $169 million (pretax) at year-end 2002. Of this amount, approximately $96 million have been in effect for more than six months and show a decline in value that is greater than 20% of amortized cost. Thus, Fitch believes that Presidential Life may be exposed to further investment impairments in future periods. Though the company reports that a significant portion of such unrealized losses are related to 'principal protected' securities, Fitch believes such securities can still expose the holder to significant economic loss since there is no protection against potential defaults on coupon payments.

Fitch rates iStar add on BBB-

Fitch Ratings assigned a BBB- rating to iStar Financial Inc.'s $35 million add-on offering of senior unsecured notes. The outlook is stable.

Fitch said it views the add-on as a positive as proceeds will be used to pay down secured debt, increasing unencumbered assets.

While the add-on offering is small relative to iStar's total capitalization, it further demonstrates management's willingness and ability to opportunistically issue debt in the unsecured bond market, an important factor in the company's ratings, Fitch said. Net of unsecured debt repayments the aggregate March 2008 notes increase iStar's unsecured debt by approximately 9.6%.

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