The ratings reflect Vivendi Environnement S.A.'s (VE) top-tier global position in water and waste-management activities, and its leading role in Europe in providing energy services. The company's low-risk business profile--benefiting from recurring income under long-term contracts--is offset at the current rating level by a weak financial profile, with funds from operations (FFO) to average net debt of 15% in 2001. While VE's current ratings reflect the company's stand-alone credit quality, Standard&Poor's only allows for a maximum two-notch rating differential with 63% owner Vivendi Universal S.A. (VU, BBB/Negative/A-3). The company is exposed to a number of rating triggers, as set out in Standard&Poor's research update published on May 7, 2002, on RatingsDirect, Standard&Poor's Web-based credit
