Moody's Investors Service downgraded the debt rating of Finlay Enterprises to Ba3 from Ba2 resulting from lowered expectations for department stores sales and particularly for discretionary purchases such as fashion and gift jewelry, in the aftermath of the Sept. 11 attack. Approximately $500 million of debt securities are affected. Finlay Enterprises, headquartered in New York City, is the largest operator of leased jewelry departments in the U.S. Calls to Bruce Zurlnick, cfo, were not returned. A spokesman declined to comment. A stable outlook is expected, however, supported by the strength of Finlay's host relationships, and the flexibility inherent in its cost structure.
* Moody's lowered Exodus Communications' unsecured debt to Ca from Caa1 due to heightened concern that the company's constrained liquidity position may be unable to sustain the troubled conditions in the Internet data center business sector. The company's credit was put under review for possible downgrade in June. The most recent action reflects Moody's expectation that the company will experience continued operational and financial pressure resulting from scaled-back IT spending plans and churn of its customer base in the face of a worsening economy.
Moody's also notes the turnover of management, culminating in the departure of CEO Ellen Hancock last month, as well as a number of board resignations. Exodus is based in Santa Clara, Calif. Calls to Paul Messler, v.p. finance, were not returned. Supporting the rating is the company's reduction of its workforce to less than 3,000 employees by the end of last month.
* Equistar Chemicals' bank debt was downgraded to Ba2 from Ba1 due to the olefin and polyolefin markets worsening more than previously anticipated, as new capacity continues to come on-stream while the U.S. economy remains weak and the European and Asian economies begin to slow. Equistar, is a manufacturer of commodity petrochemicals and plastics.
The potential for a further decline in gas prices has escalated Moody's concerns over Equistar's financial performance in the second half of 2001, especially in the seasonally weak fourth quarter. Kelvin Collard, controller, did not return calls for comment. Supporting the rating is Equistar's position as a leading North American producer of ethylene, polyethylene, propylene, ethylene oxide, ethylene glycol and butadiene.
* Hyatt Equities' senior unsecured ratings were downgraded to Baa1 from A3 reflecting a weakening of debt protection measures since fiscal year end 1999 due to acquisition and development expenditures, and in the context of a more difficult operating environment for the U.S. lodging industry. The company, headquartered in Chicago, owns and has interests in 32 hotels. Frank Borg, senior v.p. finance and administration, did not return calls for comment.
Although the company's portfolio of 37 hotels is small, it benefits from geographic diversification and from the brand equity of the Hyatt name.