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S&P cuts Enron again, warns bankruptcy likely

Standard & Poor's late on Friday cut its ratings for energy trader Enron Corp. for the second time this week, and warned that Enron is "likely" to file for bankruptcy protection soon.

The rating agency cut Houston-based Enron's long-term corporate credit and senior unsecured debt ratings four notches to 'CC', its second lowest grade other than default, from 'B-minus'. It warned it may cut those and other ratings again.

S&P said that following the breakup on Wednesday of Enron's planned merger with Dynegy Inc, "burdensome debt restructuring requirements, negligible liquidity and limited access to capital will likely cause Enron to seek bankruptcy protection. A filing in the very near term is probable."

Moody's Investors Service and Fitch, along with S&P, on Wednesday cut Enron's ratings to junk status. As a result of the downgrades, the company faces billions of dollars of payments it cannot afford to make.

Since mid-October, about $35 billion of market value has vanished from Enron's shares and bonds. The shares closed Friday on the New York Stock Exchange at 26 cents, down 10 cents.

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