Cantwell & Company Publishes Third Annual Credit Ratings Survey Results.

CHATHAM, N.J.--(BUSINESS WIRE)--July 14, 1999--

Active management of credit ratings has become an increasingly important priority among senior level corporate executives according to the results of Cantwell & Company's third annual survey of credit ratings which are being sent to survey participants today.

Established in 1991, Cantwell & Company is an independent advisory firm that specializes in debt ratings and credit. Its clients include entities with established debt ratings as well as organizations that are considering or seeking their initial ratings.

"We are very pleased by the enthusiastic response to our survey and the diversity of the participants," said Joseph Cantwell. This year there were 309 survey participants, a 30% increase over the prior year. Respondents included banks, utilities and industrial companies from 31 different countries. Among those issuers participating for the third consecutive year were Bell Atlantic, Chase Manhattan, Daimler-Benz, GMAC, GTE, IBM, Kimberly-Clark, Raytheon, Volvo and Warner-Lambert.

The survey also confirmed the widespread existence of initially unsolicited ratings. Critics of unsolicited ratings continue to argue that these ratings may be compromised because analysts do not have full access to company data while supporters insist investors need to have as much information as possible from independent third party observers.

"Far from being flawed, unsolicited ratings initially incorporate what the rating agencies hope to be conservative assumptions," said Cantwell. "Once an issue is being traded in the market, there is nothing to prevent it from attracting an unsolicited rating. Our 1998 Survey also confirmed that many of these initially unsolicited ratings eventually evolve into more traditional relationships between the issuer and the rating agencies. Such relationships involve not only significant financial disclosure but also the payment of rating fees."

Cantwell went on to say that: "On the equity side, companies actively seek analyst coverage but on the debt side they may try to deliberately avoid one or more of the rating agencies. The controversy surrounding unsolicited ratings stems from the enormous concentration of power in the hands of a relatively small number of rating agencies. Once an issuer is seen to be rated by one or more agencies, investors will frequently demand that ratings be assigned to subsequent transactions."

Over 40% of the survey participants felt that one or more of their ratings were either "too low" or "much too low". This percentage varied considerably by rating agency as did the perception as to whether the rating analysts were knowledgeable and prepared for the rating meetings. Also varying considerably by rating agency were complaints about high turnover rate among rating analysts.

The survey also revealed a number of other major trends in rating agency affairs, perhaps the most striking of which was the participation of the CEO in the actual rating meetings. While the CFO still routinely attends all meetings with the rating agencies, over 40% of the survey respondents indicated that their CEO was directly involved with the rating agencies.

The 1998 International Survey of Credit Ratings was the third annual survey conducted by the firm, which advises established and prospective issuers on ratings related topics. Survey questionnaires were sent to over two thousand three hundred entities which had published debt ratings from one or more of the major international credit rating agencies. Cantwell & Company believes that this survey is unique in providing important qualitative and quantitative insights into the critical relationship between issuers and the rating agencies.

To date, over 500 issuers have participated in one or more of the surveys. This has allowed Cantwell & Company to create a unique database allows the creation of segmented survey data using various criteria including an issuer's line of business and/or its rating level and/or its geographic location while maintaining the absolute confidentiality of individual survey responses.

"The Survey has highlighted changing global trends and practices which our clients can use to improve the way they manage their ratings," said Cantwell. "At the end of the day, an issuer's ratings effect both its financing costs as well as its access to certain markets. With the rapid growth in the number of rated entities, issuers are now finding that they are competing for ratings in much the same way that they compete for attention in the equity markets. This specialized exercise in financial public relations demands a somewhat different approach since the rating agencies have a completely different agenda than the equity markets."

Survey participants receive complimentary copies of the consolidated survey results. Non-participants may arrange to purchase the survey results for $100 (prepaid orders only plus 6% sales tax for delivery to all addresses in the State of New Jersey). Survey order forms are available by contacting us directly or through our website (www.askcantwell.com).