Why Credit Agencies Didn't Switch Off Enron --- S&P Cries `Junk,' But the Warning Comes Too Late
Throughout the Enron saga, the rating agencies found themselves the target of repeated and intense lobbying by Enron, Dynegy and their bankers at J.P. Morgan Chase & Co. and Citigroup Inc. All tried -- and ultimately failed -- to come up with assurances that the merger would bolster Enron and th...
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Published in | The Wall Street journal. Eastern edition |
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Main Author | |
Format | Newspaper Article |
Language | English |
Published |
New York, N.Y
Dow Jones & Company Inc
29.11.2001
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Edition | Eastern edition |
Subjects | |
Online Access | Get full text |
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Summary: | Throughout the Enron saga, the rating agencies found themselves the target of repeated and intense lobbying by Enron, Dynegy and their bankers at J.P. Morgan Chase & Co. and Citigroup Inc. All tried -- and ultimately failed -- to come up with assurances that the merger would bolster Enron and thus protect bondholders and lenders from suffering losses. Indeed, every party to the deal -- until yesterday -- kept working to provide financial infusions to Enron to keep the deal alive. Enron executives were particularly desperate to hold off a ratings downgrade. Once the debt was lowered to junk status from investment grade, a whopping $3.9 billion of debt immediately became due, jeopardizing Enron's ability to stay afloat. Worries about such a debt downgrade weeks ago pushed Enron into the merger with Dynegy, despite reservations from some Enron executives about whether the deal was right. Enron pledged some of its best assets to secure a $500 million investment from J.P. Morgan Chase and Citigroup's Citibank, and agreed to strict terms demanded by banks to get an emergency $1 billion credit line from various banks. In recent days, the two companies worked to restructure their merger and to raise still more liquidity for Enron. |
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ISSN: | 0099-9660 |