S/P DOWNGRADES BAKER <BKO>, UPGRADES HUGHES <HT>
Standard and Poor's Corp said it
downgraded Baker International Corp and upgraded Hughes Tool Co
to reflect the companies' merger into Baker Hughes Inc.
    The action affected About 840 mln dlrs of debt securities.
    S and P said that depressed market conditions would
continue to constrain the new company's operating earnings and
cash flow for several years, despite dominant positions in the
oil services industry.
    Nonetheless, pro forma debt leverage of about 40 pct should
decline within a year to about 35 pct because of proceeds from
asset sales, S and P said.
    Cut were Baker International's senior debt to A-minus from
A and commercial paper to A-2 from A-1. The unit Baker
International Finance NV's senior debt, guaranteed by Baker,
was reduced to A-minus from A.
    S and P raised Hughes Tool's senior debt to A-minus from
B-plus, subordinated debt BBB-plus from B-minus and commercial
paper to A-2 from C.
 Reuter
