Moody's rates Conseco convertibles Caa3

Moody's Investors Service said it affirmed the ratings of Conseco, Inc., including the senior bank facility at Caa1, and its insurance subsidiaries and changed the outlook to positive from negative.

The rating action follows the announcement by Conseco that it will enhance its capital position through the issuance of equity and new convertible debentures to pay down its existing convertible debentures. Moody's also assigned a Caa3 rating with a positive outlook to the anticipated issuance of $293 million of convertible senior debentures by Conseco.

Moody's senior vice president Scott Robinson commented: "Our decision to change the rating outlook to positive from negative was largely predicated on the company's ability to eliminate the potential liquidity strain from the upcoming maturity of its convertible senior debentures as well as enhance its capital position.

"Notwithstanding these positive developments, we remain concerned about the tightness of the company's debt covenants, especially when they revert back to more conservative levels in the third quarter of 2010."

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