S&P downgrades McLeodUSA

Standard & Poor's downgraded McLeodUSA Inc. and put the ratings on CreditWatch with negative implications. Ratings affected include the senior secured bank loan, cut to CC from B, the senior unsecured debt, cut to C from CCC+, and the preferred stock, cut to C from CCC.

S&P's action follows McLeod's announcement of a recapitalization plan.

"Even if the company does not pursue a pre-packaged bankruptcy, the corporate credit rating will still be lowered to D because Standard & Poor's views the exchange offer to be coercive and tantamount to a default," the rating agency said.

It commented: "The combination of savings from overhead reductions and proceeds from asset sales would have provided sufficient liquidity for the company to operate over the near term, but McLeod chose to undertake the current recapitalization or bankruptcy route."

S&P downgrades CNF

Standard & Poor's downgraded CNF Transportation, Inc.

Affected ratings include the $100 million of term convertible securities (TECONS) issued by CNF Trust I to BB from BB+ and CNF Transportation's notes due 2005, cut to BBB- from BBB.

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