MOODY'S CUTS BAKER <BKO>, UPGRADES HUGHES <HT>
Moody's Investors Service Inc said it
downgraded the debt ratings of Baker International Corp and
upgraded Hughes Tool Co's debt.
    The actions affect a combined 662 mln dlrs of securities.
    Moody's said the anticipated merger of Baker and Hughes
Tool into Baker Hughes Inc would result in increased financial
leverage at a time of weak demand for the combined company's
products and services.
    The agency cut the senior debt of Baker and its finance
unit, Baker International Finance N.V., to Baa-1 from A-2. It
affirmed Baker's Prime-2 commercial paper.
    Moody's upgraded Hughes Tool's senior debt to Baa-1 from
B-2 and subordinated debt to Baa-2 from B-3.
    The rating agency said that a poor outlook for the oil
services industry would pressure earnings and cash flow for
Basker Hughes over the intermediate term.
    However, Moody's noted that the combined company would
benefit from cost reductions and consolidations made possible
by the merger. Also, the company's competitive position should
be substantially strengthened by the merger, Moody's said.
 Reuter
